Holyoake & Anor v Candy & Ors

Grosvenor Gardens House (“GGH”) is a Grade II listed mansion block designed by the distinguished Victorian architect Thomas Cundy III and completed in around 1868. It is situated in the Grosvenor Gardens Conservation Area in the City of Westminster, on the eastern edge of Belgravia, just around the corner from Victoria station. The major part of the conservation area consists of two triangular open spaces known as Grosvenor Gardens, lined with grandly-scaled mid-Victorian terraces, and GGH defines the north-east side of the lower, southern, triangle.

In the relevant volume of Sir Nikolaus Pevsner’s Buildings of England (London 6:

and GGH itself as having been built for the Belgrave Mansions Co and containing:

“first-class flats, which, in imitation of ‘the Parisian mode of life’ were let furnished, the earliest in London. A restaurant within saved residents from having to cook.”

Much of the original architectural and structural integrity of GGH has survived but by 2011 it had long since ceased to be used for its original purpose. Apart from some retail units on the ground floor, the building was let out as relatively low grade office units to a range of small business tenants. When an opportunity arose to buy the freehold, Mr Mark Holyoake (the First Claimant in this action), who had some experience of developing property in the area, was attracted to the idea of buying it with a view to converting it back into high-class residential use, and on 18 July 2011 caused Hotblack Holdings Ltd (the Second Claimant, “Hotblack”), a Jersey company ultimately owned by him, to contract to buy the freehold for £42m.

Under the terms of the contract completion was originally due on 16 September 2011, but Mr Holyoake was not in a position to complete on that date, and secured an extension. He was however still short of the funds needed and on 12 October, after other attempts to raise funds had been unsuccessful, he approached Mr Nicholas (or Nick) Candy (the First Defendant) for a loan of £12m at very short notice, offering generous terms of interest at 20% per annum and 20% of the net profits of the development for an unsecured personal loan. Mr Holyoake had met Mr Nicholas

Mr Holyoake had anticipated not only benefiting from having the funds to complete the purchase but also from the Candy brothers’ expertise in high-class residential development, his plan being to obtain planning permission, redevelop GGH and sell it as luxury flats, a project which he thought would be very profitable. He was disconcerted therefore to find that instead of devoting their energies to supporting the project, the Candy brothers seemed more intent on securing CPC’s position in relation to its loan. CPC queried the sufficiency and accuracy of a net asset statement Mr Holyoake had provided as part of the terms of the loan; threatened, in Mr Holyoake’s view unjustifiably, to disclose the loan to the senior lender into the project; and then on 29 November 2011 formally confirmed that in its opinion Mr Holyoake was in default under the loan for failing to provide an acceptable net asset statement. CPC then attempted to get Mr Holyoake either to repay the loan or provide security for it, and a long series of supplemental agreements between Mr Holyoake and CPC, rescheduling the loan on terms, were negotiated and entered into, some against the background of actual or threatened proceedings.

Mr Holyoake in due course succeeded in obtaining planning permission for the development of GGH which was granted to Hotblack in July 2013. But he did not build out the development, being already bound under one of the agreements with CPC to sell GGH. Hotblack in the event sold it in February 2014 for over £86m.

In this action, Mr Holyoake brings a number of claims, largely in tort. He claims that he was deceived into entering the loan in the first place by a misrepresentation by a director of CPC, Mr Richard Williams (the Third Defendant), said to have been made fraudulently, that his net asset statement was being sought as a formality and would not be used against him. A second group of claims is based on allegations that CPC

The Defendants, as well as denying the factual basis of the claims, rely on a Settlement Deed dated 15 October 2013 (“the Settlement Deed”) under which Mr Holyoake and Hotblack released any claims that they might have against CPC or its associates (defined in terms which would include all the other Defendants). The Claimants’ response is that the Settlement Deed itself was entered into as a result of duress or undue influence and/or is liable to be reopened under the CCA.

I set out below my findings of fact. This litigation was hard fought and many issues of fact were raised in the course of the trial, some of less relevance than others. I have not found it necessary to deal with all of them, but have sought to deal with all the matters directly relevant to the allegations in issue, and such other matters as seem to me to assist in resolving them.

The protagonists, Mr Holyoake on the one side, and Messrs Nicholas and Christian Candy on the other, were each cross-examined at great length. Each side made a sustained attack on the other’s veracity. The meticulous forensic examination of these matters has persuaded me that there is some justification for these attacks on both sides, and that each of these three has been shown to be willing on occasion to lie when they consider their commercial interests justify them in doing so. I do not go into the grounds for these conclusions here: I give the detail below where appropriate. For present purposes what is significant is that it means that in assessing what happened – or to be more precise, in deciding whether any particular factual allegation has been proved to the requisite standard, that is on the balance of probabilities – I have had regard in particular to the contemporaneous documentary material (of which there is an abundance in this case, particularly e-mails) and the inherent probabilities. This indeed is what the Court usually does when faced with a conflict of oral evidence – it is by now a commonplace that the memory even of witnesses doing their honest best is often unreliable (see Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) at [15]-[23] per Leggatt J) – but is particularly apt when, as in this case, the veracity of witnesses is in question, as has long been recognised: see The Ocean Frost [1985] 1 Ll Rep 1, 57 per Robert Goff LJ:

“I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities.”

I start by giving some of the background of the more significant of the participants in the events giving rise to the litigation. Each of these gave evidence before me; there were also other witnesses that I will refer to as appropriate, but these are the central ones.

Mr Holyoake was a student at Reading University in the early 1990s where he met Mr Nicholas Candy. He then set up a business called Bloomsbury International Ltd which was involved in the distribution and manufacture of food and seafood products. This grew into a significant group of companies, known as British Seafood, which collapsed in early 2010, at least four of the companies, including Bloomsbury International Ltd itself, then one of the group’s principal trading companies, being put into administration on 19 February 2010 by Morgan J. Mr Holyoake was then Chief Executive Officer or CEO of the four companies, as well as the majority owner of the business, holding over 50% of the ultimate holding company, British Seafood Group Holdings Ltd, and about 50% of a related holding company, British Seafood Distribution Group Holdings Ltd.

The collapse of British Seafood led to Mr Holyoake being involved in heavy High Court litigation, being sued in at least three sets of proceedings in 2010. The detail of these claims is not relevant to the present action, but it is possible to gain an idea of the scale and seriousness of them from some of the material in evidence.

The first action, brought by claim form dated 16 March 2010, was a claim brought by the four companies already referred to as a result of investigations by the administrators, who were partners in Deloitte LLP. According to the Particulars of Claim, the companies’ liabilities at the time of going into administration were said to be then in excess of £250m, owed to a large number of bank lenders, against assets in the shape of non-related party trade debts and realisable stock of some £15.6m. The Particulars of Claim alleged that Mr Holyoake, together with Mr David Wells, the companies’ Finance Director, had conspired to commit a large-scale fraud on the companies. The essential allegation was that the two of them, who were said to have had complete managerial control over the companies, had caused the claimant companies to obtain, and then borrow large sums under, bank facilities for the purpose of funding specific purchases of fish products; that they had caused these sums to be remitted to suppliers in Hong Kong on the basis that the companies were purchasing such products; and that many such payments were not made in respect of any genuine legitimate business transaction, being paid to ostensible suppliers in Hong Kong that were not genuinely supplying such product and that were ultimately beneficially owned by Mr Holyoake. I should make it clear that although it was suggested to Mr Holyoake in cross-examination that he would not have settled the claims in the way he did (as to which see below) unless there was something in them,

On 25 March 2010 a second action was brought by GMAC Commercial Finance Ltd against Mr Holyoake, Mr Wells, and Mr Holyoake’s father (Mr Alan Holyoake) and brother (Mr Laurence Holyoake). This concerned another company, Seatek Ltd, part of the distribution side of the business, of which Mr Holyoake and Mr Wells were directors and which had gone into administration on 23 February 2010. The claim here was that GMAC had advanced monies to the company under an invoice discounting agreement against debts notified to it, but that the debts had turned out not to be bona fide obligations in the ordinary course of business. All the defendants were sued for breach of warranties given by them, and Mr Holyoake and Mr Wells were also sued for damages for deceit, the claim being for some £6m.

A third action was brought by claim form dated 12 May 2010 by 3i Group plc and other companies in the 3i group (together “3i”), again against Mr Holyoake and Mr Wells (and others). 3i had invested in the British Seafood group, and although I have not seen the details of the claims made in this action, it was accepted in evidence that the claim was for fraud, and an online report referred to 3i claiming the sum of £75m that it had been fraudulently induced to invest in British Seafood. Undertakings in the nature of a freezing order were given by Mr Holyoake to Vos J, and later continued, and Floyd J was told that the amount frozen by such undertakings was £90m (see Bloomsbury International Ltd v Holyoake at [28]).

Other related proceedings were taken in Hong Kong, Luxembourg and Iceland and although they do not appear to have involved Mr Holyoake personally as a defendant, they involved his companies.

The Bloomsbury and 3i actions (and the related foreign proceedings) were settled, with no admission of liability, by a Deed of Settlement, known as the Overarching Agreement, dated 23 December 2010. For present purposes two points are relevant. The first is that scheduled to the agreement were lists of Mr Holyoake’s assets and liabilities, which he warranted to be true, accurate and complete. Where values are given for his assets they form an interesting contrast with those shown on the net asset statements provided by Mr Holyoake to CPC less than a year later. The second is that under the terms of the agreement Mr Holyoake was obliged to pay substantial sums to the claimants in both actions by way of settlement. A total of £13.8m was to be paid to a 3i company (which acted as Security Trustee on behalf of the two groups of claimants). Mr Holyoake was personally liable to pay, or (as the case may be) procure the payment of the entire sum; although it was envisaged that £250,000 was to come from Mr Wells, and some sums from others, the bulk of this was expected to come from Mr Holyoake himself. The sum was payable by instalments, with certain

The GMAC action was in the event also settled, although in this case not until 12 January 2012. The Settlement Agreement required the defendants to pay £1m immediately and a further £2.13m by 2 March 2012.

Mr Holyoake was also the subject of an investigation by the Serious Fraud Office in connection with the collapse of British Seafood. Again I do not have the details, but ultimately the investigation did not result in any action being taken against Mr Holyoake.

It is scarcely surprising in the circumstances that Mr Holyoake’s energies in 2010 were devoted to dealing with the litigation. In April 2011 he told Mr Kalkwarf, an architect who was pressing him for payment of his fees, that the litigation during the course of the previous year was “all-consuming”, and that his time since the settlement in December 2010 had been spent unwinding the injunctions on his businesses and personal assets.

The upshot of all this was at the time when he was trying to acquire GGH (that is in the middle of 2011), he had not entirely put the British Seafood episode behind him. He still owed substantial sums (of the order of £10m in October 2011) to 3i under the Overarching Agreement, and had charged his properties to them, which meant that he had little collateral to offer lenders. He also had reputational issues, which made raising finance more difficult. For example in July 2011 he tried to obtain a loan for the purchase of GGH from Investec, a bank of which he was a long-standing customer (an Investec company had a subsisting mortgage for about £9m on a property he owned at 42-44 Grosvenor Gardens). Mr Daniel Austin of Investec, who was in general supportive of Mr Holyoake’s application, told him on 6 July that he had been asked by others at Investec not to lend him funds, and it was “causing him issues internally”; Mr Holyoake said in evidence, when asked if his role in the collapse of British Seafood was causing these issues, “Yes, there were issues wherever I went in that respect.” In August 2011 Mr William Pym (a close associate of Mr Holyoake’s who I refer to in more detail below) approached Deutsche Bank on his behalf and received a response that compliance colleagues had carried out preliminary checks on Mr Holyoake and the bank would like to discuss their findings, which Mr Pym forwarded to Mr Holyoake with the comment “You continue to be a naughty boy”. Indeed at the end of April 2011 a Google search of his name threw up 7 negative results in the first 10, and Mr Holyoake engaged a business called Digitalis Media to seek to improve this.

Mr Holyoake’s own evidence in cross-examination was that when he acquired GGH he was “transitioning”, that is that he was in a transition period between finally paying off 3i and moving into a new life, building a new business. He accepted that the GGH opportunity did not come at an ideal time for him, and it would have been better if it had come up 6 months later.

Three other points by way of background can conveniently be noted here. First, Mr

Second, Mr Holyoake and his wife Emma had sold their London house in 2010 and moved to live in their villa in Ibiza, Casa Campanilla. Mr Holyoake told me that although he moved in 2010, he thought he did not become formally resident in Spain until 2011 because it took some time to process the paperwork. The villa and the land it stood on was held by an Irish company, Hollywell Ltd (“Hollywell”), and some additional land by another Irish company, Blue Valley Ltd (“Blue Valley”), the shares in each company being owned 50/50 by Mr Holyoake and his wife. The land owned by Hollywell and the shares in Hollywell were charged to Citibank.

Third, Mr Holyoake had had some experience of property development, including in the immediate vicinity of GGH. The assets disclosed in the Overarching Agreement included (i) a leasehold interest in 42-44 Grosvenor Gardens (together with 42-44 Grosvenor Gardens Mews South) held by Mr Holyoake through Jaybright LLP and (ii) a leasehold interest in 46-48 Grosvenor Gardens (together with interests in 38, 46 and 48 Grosvenor Gardens Mews South) held through Wellgold LLP. Nos 42 to 48 Grosvenor Gardens are four adjacent buildings forming part of the terrace on the west side of the lower triangle of Grosvenor Gardens and so are directly opposite GGH; the mews properties are behind them. Mr Holyoake had acquired 46-48 in January 2007, and 42-44 in March 2007, and both had been redeveloped in 2009/10 for offices (including offices he used himself which overlooked Grosvenor Gardens and from which you could see GGH), the mews properties being redeveloped for residential use. The Overarching Agreement also disclosed another property acquired for development, a freehold at 2 Westbourne Grove Mews W11, held through Hazelend LLP, which Mr Holyoake had acquired in 2007 as a car repair garage and which he had plans to redevelop for mixed commercial and residential use. None of these projects however was on anything like the same scale as GGH, and Mr Holyoake confirmed in evidence that GGH was the biggest project that he had done.

It is convenient at this stage to deal briefly with my assessment of Mr Holyoake as a witness. I have already said that the evidence shows that he was willing to lie when his commercial interests justified it. The evidence reveals some striking examples of this. In April 2012 he and Mr Wells created a loan agreement between Mr Holyoake and Hotblack, and in July 2012 board minutes of Hotblack, both of which were backdated. In plain language these were forgeries, designed to conceal from CPC the fact that Hotblack had also borrowed money from Oscarone. In April 2013, he and Mr Lovering colluded to put forward to CPC a contract for a sale of GGH to Sherbourne Properties Ltd (“Sherbourne”) as if it were a Qualifying Contract for the purposes of one of the agreements with CPC. This was despite the fact that a Qualifying Contract required the purchaser to be an arm’s length third party, and as Mr Holyoake and Mr Lovering knew, Sherbourne was not, being wholly owned by

Moreover his lies included what I am satisfied was a deliberate lie in his pleadings. As appears in more detail below Mr Holyoake completed the purchase using not only a senior loan of £24m (at that stage from Investec) and CPC’s loan of £12m but also a mezzanine loan from Oscarone of £7.5m. Oscarone’s loan was made to Hotblack in October 2011 and there is no doubt that Hotblack needed to, and did, use it in order to complete the purchase. The Candys knew nothing of this at the time and indeed Mr Holyoake never disclosed the Oscarone loan to them during the entirety of the time he was dealing with them.

By the time of the Defence in these proceedings (served on 15 October 2015) however, the Defendants had discovered the existence of the Oscarone loan. That enabled them to plead that Mr Holyoake had deliberately omitted reference to the loan in net asset statements that he provided to CPC in October and November 2011 (paragraph 65.9 of the Defence), and that a confirmation given by Mr Holyoake to Mr Christian Candy on 18 March 2012 that he only used his equity and CPC’s loan to acquire GGH and no other third party equity was a knowing lie as he had used funds from Oscarone (paragraph 147). In his Reply (served on 8 December 2015 and containing a statement of truth signed by Mr Holyoake personally) Mr Holyoake pleaded in response to paragraph 65.9 that the net asset statements only required Mr Holyoake to show assets of £120m at the time immediately prior to the making of CPC’s loan and:

“the fact that Oscarone thereafter became a source of funding for the Project was wholly irrelevant.”

And in response to paragraph 147 he pleaded that he did give the confirmation:

“and it was true. While Mr Holyoake did obtain funds from Oscarone, this was not in order to purchase the Property, but in order to help fund the next stage of the Project.”

I do not need to set out any more examples here. I have said enough to explain why I approach Mr Holyoake’s evidence with very considerable reserve. And while I doubt whether the law ever regards lies as an acceptable way to conduct business dealings, it need hardly be said that the Court is bound to take a particularly adverse view of a litigant who lies in the course of litigation, as this undermines the Court process itself.

I have already referred to Mr Wells as a defendant in the litigation arising out of British Seafood. He is a chartered management accountant. He has worked with Mr Holyoake since 1998 on a day-to-day basis and served as financial director and board member of many of his businesses. He is in effect Mr Holyoake’s right-hand man when it comes to his financial affairs.

The evidence reveals that he was willing to do whatever Mr Holyoake asked him to do, including the forgery already referred to. There were a number of other examples of questionable behaviour, some of which I will come to as appropriate.

Mr Wells disclosed in his witness statement that he had an arrangement with Mr Holyoake under which Mr Holyoake pays him 5% of the profits on all investments, which would have included any profit made on GGH; and in oral evidence explained that the 5% would apply to any recoveries made by the Claimants in this action (but only on a net basis so after allowing for the repayment of any outstanding liabilities).

In oral evidence Mr Wells had difficulty distinguishing between his own position and that of Mr Holyoake, frequently referring to what “we” did or thought when he meant Mr Holyoake. I do not think his evidence is truly independent of Mr Holyoake’s.

Mr Pym is a banker. He spent 10 years as a private banker with Citibank in Geneva, and then in 2006 moved to Crédit Suisse. He first met Mr Nicholas Candy in 2004, and was introduced to Mr Christian Candy about a year later, and (by Mr Nicholas Candy) to Mr Holyoake in about 2006, becoming friendly with both the Candy brothers, particularly Mr Christian Candy (who accepted in cross-examination the description of Mr Pym as a “good and close friend of yours”, and who himself described him as “one of my dearest friends, one of only six people or seven people on my stag weekend”), and also with Mr Holyoake. While at Citibank and Crédit Suisse he assisted the Candy brothers with financing some of their larger developments, including the refinancing of One Hyde Park, and the business he received from them made up a significant portion of his overall business. He was also Mr Holyoake’s banker at Crédit Suisse.

In 2009 he left Crédit Suisse, and in March 2010 became one of the managing partners of a Swiss company called The Private Office SA (“TPO”). TPO had initially been set up under the name Heritage Private Office as a joint venture between Banque Heritage and 3 partners, one of whom was Mr William Lovering, but in March 2010 Banque Heritage had sold its stake to the management. It was set up to provide wealth management services to wealthy individuals, the business model being that it would charge its clients commission on transactions and for advice, and would also seek returns by investing its own capital alongside its clients’ capital.

Mr Holyoake encouraged Mr Pym to join TPO, and had a very close involvement in it personally. The precise details of his involvement remained somewhat obscure to me even after the issue had been explored in oral evidence, but it is apparent that he either was, or was intended in due course to become, the majority shareholder in the business: a list of shareholder contributions dated 20 May 2011 showed Mr Pym and Mr Lovering as each holding 3,000 out of 19,000 shares (just over 15% each), another individual holding 500 (2.6%) and “NB/MH” as holding the remaining 12,500 shares (over 65%). MH is Mr Holyoake and NB is Mr Nicholas Barton, a very close friend of his, and Mr Holyoake explained in evidence that because of the collapse of British Seafood he had enough on his plate and it was not the right time for him to invest, so he had asked Mr Barton if he would like to invest instead of him, but that from February 2011, Mr Holyoake had started taking over Mr Barton’s position. Although the process may not have been completed by July 2011 when he acquired GGH, Mr Holyoake accepted that he had an influence on TPO from its inception.

Mr Pym also has an interest in the outcome of the litigation. He and Mr Lovering each had a 15% stake in the GGH project, and he accepted that that had been transferred to the litigation: Mr Holyoake’s evidence was that after all the third parties who had lent into the project had been repaid, Mr Pym and Mr Lovering would get 15% each and he would get the balance.

Mr Pym gave some evidence for the Claimants at an interlocutory stage in which he denied that he was doing so because of any personal interest in the litigation. Mr Lord QC, who appeared for the Defendants, submitted that this was misleading and untrue, but that I think overstates it: he did not in terms deny that he had a personal interest, but only denied that he was giving evidence because of any personal interest, which is not the same. But neither there nor in his witness statement for trial did he clearly explain that he did have such an interest and what it was, and indeed in his

Mr Pym was shown to have been willing to mislead CPC (and at an earlier stage Investec) as to the availability of funds to Mr Holyoake, as detailed below. I find that he is not truly independent of Mr Holyoake and treat his evidence with considerable caution.

Mr Lovering was one of the founder members of TPO, and from March 2010 ran it with Mr Pym. He also had a background in banking, working at a Swiss private bank called Lombard Odier. From 2005 to 2009 he worked for the family office of a Saudi family known as Al-Rajhi.

As already referred to, he too had an interest in GGH which has been transferred to the outcome of this litigation. He made it clear in his witness statement for trial that he and Mr Pym had invested their own funds in GGH. But he too failed to say anything about having a 15% interest in the outcome of the litigation, and indeed said, under the heading “Interest in GGH”, that:

“I do not have, and have never had, any other direct or indirect ownership interest in the GGH project.”

In oral evidence he initially denied that he had any interest in the outcome of the proceedings specifically; having then admitted that he had a 15% profit share in GGH and that that carried over to the litigation, he sought to explain what he had said in his witness statement by distinguishing between an interest or stake in GGH and a profit share at the back end or “carry”. I was not impressed with this evidence. However it was originally structured, whether as a back-ended carry or not, Mr Lovering plainly has a significant financial interest in the outcome of this litigation and it should have been fully and fairly disclosed.

I have already referred to the role Mr Lovering was willing to play in deceiving CPC both as to the existence of a Qualifying Contract and in impersonating a representative of Arlington. I find that he too is not truly independent of Mr Holyoake, and again I treat his evidence with considerable caution.

Mr Nicholas Candy, as already mentioned, met Mr Holyoake at Reading University where they became friends, sharing a house together in their second year. They then

It was suggested to Mr Holyoake, on the basis of certain e-mails, that despite his apparent friendship with him, he privately had a rather disparaging view of Mr Nicholas Candy. I am not persuaded that this was so, the e-mails in question (which I need not set out) not being anything other than jokey banter. I see no reason to doubt that Mr Holyoake and Mr Nicholas Candy were indeed in 2011 genuinely close friends who saw a lot of each other socially and enjoyed each other’s company. They had not however done any business together.

Mr Stewart QC, who appeared for the Claimants, asked me to find that Mr Holyoake trusted Mr Nicholas Candy, and through him Mr Christian Candy, and was excited at the prospect of working together in relation to GGH. I accept that Mr Holyoake trusted Mr Nicholas Candy as a friend; and that he was excited at working with the Candy brothers in relation to GGH. I am not sure that he trusted Mr Christian Candy in particular – he was not a close friend of Mr Holyoake’s although he had met him through his brother on a number of occasions – but I accept that he had no particular reason to distrust him.

The Candy brothers have a very high profile in the media and are well known for being highly successful in the field of high-end property development. Mr Nicholas Candy estimated that from 1995, when they bought their first property, to about 2005, when he left the UK to live in Monaco for tax reasons, they had probably done some 50 developments together, and he had made “tens and tens and tens of millions of pounds”. They used a number of corporate vehicles for their developments and in 2001 also established together Candy & Candy Ltd (“C&C”); C&C was an Englishregistered company that specialised in luxury interior design. The ostensible position is that they subsequently split their interests, Mr Christian Candy resigning as director of C&C in March 2011 and selling his shares to Mr Nicholas Candy, and concentrating on CPC, which operates principally in the field of property development, leaving Mr Nicholas Candy to own and run C&C which deals with interior design, project management and marketing. The position of both brothers is that Mr Christian Candy is the sole beneficial owner of CPC (a company which he personally had established in Guernsey in 2003, the company name representing his initials), and that Mr Nicholas Candy has no interest in it. That this was the true position was supported by each of the witnesses who were or had been directors of CPC (Messrs Williams, Smith, Dean and David) when they gave evidence.

The Claimants however have alleged that this ostensible position is a façade. It is common ground that the brothers have different roles suited to their somewhat different skills. Mr Pym, who had been friends with both of them, put it like this: Mr Nicholas Candy covered the public representation and promotion side of the business, being the “front of shop” with all the sales talk, and his brother covered the operations and financials, being the “brains in the back office”. Mr Christian Candy accepted as fair the way it was put to him by Mr Stewart in cross-examination: “you are the number and details man and he is the salesman and showman”, Mr Candy agreeing that he was more numerate and his brother more marketing based. But the Claimants say that the reality is that despite their different roles, they are in truth joint beneficial owners of CPC, an assertion that the Claimants have advanced vigorously and persistently in the face of the brothers’ denials.

This case was based on a number of strands. First, there was the evidence of witnesses who said that Mr Nicholas Candy routinely held himself out as a co-owner of everything. Mr Holyoake’s evidence was that Mr Nicholas Candy told him on innumerable occasions that he and his brother jointly owned all their business interests together; that they had been advised to restructure their businesses for tax reasons, which would mean one of the two brothers would have to live offshore and the company used for their property development would also have to be based offshore; that it was for this reason that his brother Chris had moved offshore while he remained in the UK to have a presence on the ground, CPC being set up in Guernsey with Chris as the only shareholder; and that he trusted his brother completely and was comfortable that he would get his 50% share of the profits. Mr Holyoake also said that he had hundreds of conversations with Mr Nicholas Candy about his business interests and they were always about CPC projects, not about C&C.

Mrs Holyoake gave evidence that Mr Nicholas Candy (whom she had known through her husband for many years and seen on numerous occasions socially) used to tell her that he and his brother were 50/50 partners and owned everything jointly, although his brother held the properties and projects for tax reasons abroad. She also became good friends with Holly Valance (formerly Mr Nicholas Candy’s girlfriend and now his wife), and recounted an incident at a party at a friend’s house in Ibiza in June 2012 when Ms Valance told her that Mr Nicholas Candy was upset because his brother was not giving him his 50 per cent of the money. Despite submissions from Mr Lord that Mrs Holyoake’s evidence should be rejected on the grounds that she was simply parroting untrue explanations given by her husband, I found her a credible witness. She was obviously fiercely loyal to her husband and deeply supportive of him, but did not strike me as a woman who was simply repeating untruths at his behest, but as one who was giving her own independent evidence to the best of her recollection.

In similar vein, Mr Pym said that during the entirety of his dealings with the Candy brothers, both brothers had always been intimately involved and they told him that their business was owned 50/50 between the two of them; he regularly dealt with both of them in relation to CPC business, and Mr Nicholas Candy was not only involved but often leading the decision making process.

Second, the Claimants called Mr Clive Hyman. No objection was made to his giving evidence although none of it directly concerned GGH or the events on which the action is based. Mr Hyman is a chartered accountant. He was formerly a partner at KPMG, who left KPMG in 2004 and set up his own consultancy under the name Hyman Capital in 2005. For a number of months in 2005 he acted as interim CEO of C&C. His brief included stabilising the business after a period of upheaval, reviewing files on completed transactions, putting them in order and completing the paperwork, and implementing appropriate financial controls. It also included preparing for the

Mr Hyman had come forward to give evidence voluntarily. There was an unusual aspect of his evidence which is that after giving his first witness statement (dated 5 November 2016) he made a second witness statement (dated 23 February 2017), which detailed some approaches he said he had received since his first statement. I need not refer to the first such approach, but the others were telephone calls from a business contact of his, Mr Bradley Annis. According to Mr Hyman Mr Annis claimed to have an (unnamed) contact who worked for Mr Christian Candy. On one call, around early February, Mr Annis said that his contact had told him that the Candy brothers were unhappy with certain aspects of Mr Hyman’s evidence and would go for him very heavily at trial; on another call, on 20 February, Mr Annis said that his contact had told him that the Candy brothers had let it be known that should their defence of this action be successful, they would pursue anyone who had given evidence for the Claimants, through the Courts. Mr Hyman took this last approach sufficiently seriously to report it to the police. Mr Hyman was naturally crossexamined about this, but stuck to his evidence; he gave it convincingly and I am disposed to accept that he was telling the truth about the calls from Mr Annis. It was suggested that he had an axe to grind against the Candys but I was not persuaded that his evidence could be explained away on that basis.

None of that of course establishes that what Mr Annis said to him, let alone what Mr Annis’s unnamed contact is supposed to have said to Mr Annis, is true and the episode as a whole illustrates the undesirability of relying on untested multiple hearsay evidence. However much I am disposed to accept Mr Hyman’s evidence about it, it would I think be wrong to base any findings against the Defendants on it. There was however an interesting sequel: Mr Christian Candy was asked if he had let it be known that he would be pursuing any witnesses who came to give evidence for Mr Holyoake, and gave what I consider to be a rather surprising series of answers. Instead of simply saying that he had not considered, and would never consider, such a thing, his answers were:

“A. No, my Lord. I take this in steps. First of all I need to get through this litigation. Once this litigation is resolved, I will then consider my next steps. I’m a guy who works very much in projects, so I’m just focused purely on this litigation.

Q. So do I take it from that that you are contemplating taking steps against Mr Hyman?

A. My Lord, as my legal team have told me, “Christian, one step at a time. Focus on your evidence. Focus on this case. Wait for his Lordship to give judgment and then we can regroup.”

Q. Can you answer my question please?

A. I think I have, my Lord. I do not look beyond actually the giving of my evidence, then look beyond the trial and then we wait patiently for your judgment, my Lord.

Q. Do I take it that you are contemplating steps against Mr Hyman?

A. No, my Lord.

Q. Your previous answer, I suggest, strongly suggests that that is actually within your contemplation.

A. I see no basis on which I can take any action against Mr Hyman, so, I just want to get through this litigation and then we will sit down with my legal team and figure out where to go next.”

That indicates that Mr Candy had taken some advice from his legal team and been told that he should focus on the case and his evidence, and that they could consider any next steps after judgment; it also rather suggests that he has been told, or discovered, that there is no action that can be taken against Mr Hyman, which itself suggests that he was interested in whether there might be. There is other evidence that Mr Candy does not like to be crossed, and I think there may be some truth in the suggestion that he was angered by Mr Hyman’s evidence. I am not however going to make any positive finding to this effect, as I do not consider it ultimately assists in the resolution of the issues in this trial.

Third, the Claimants relied on a number of documents which they said demonstrated that Mr Nicholas Candy had an interest and involvement in CPC that can only reasonably be explained by him being a co-owner. Some of them do not I think bear the weight which Mr Stewart sought to put on them: an example is an e-mail of 4 February 2012 from Mr Christian Candy to his brother where he said:

“We have loans out to him of [redacted]”

This was a reference to monies owed by Mr Smith to CPC (which had advanced him money) and it was suggested that the “We” here was a reference to the two brothers. But it seems to me quite natural for Mr Christian Candy as the owner of CPC to refer to his company as “we”; indeed Mr Christian Candy said that he used “we” to refer to himself and CPC without any distinction between them, an explanation that I accept. Similarly Mr Stewart placed considerable emphasis on an e-mail from Mr Christian Candy to Mr Holyoake on 14 December 2011 in which he referred to his brother as “my lifetime business partner”. But he was not here giving an account of any financial arrangements that he had with his brother, but explaining why he felt able to trust him. On any view, they had built their fortunes together. They also continued to have a close working relationship: where CPC carried out a development, C&C would be engaged to provide a number of services for the development such as development management, interior design, planning and marketing. They also spoke regularly on the telephone and Mr Christian Candy routinely consulted his brother on business propositions, and used him as a sounding board for ideas. Indeed as well as the board meetings of CPC at which “actual operational decisions” (to use Mr David’s words) were taken on behalf of CPC by its properly appointed directors (and which Mr Nicholas Candy never attended), there were regular strategy meetings which he did attend and which discussed matters at a more high level; I do not think it matters if he was there as representing C&C which might have an interest in CPC’s projects, or simply as someone whom his brother trusted and whose advice he valued. In those circumstances I do not find Mr Christian Candy’s reference to his brother as his “lifetime business partner” to be any indication of the true ownership of CPC.

There is however other material which is not quite so readily explicable. In particular Mr Nicholas Candy had a habit of referring to CPC’s business as if he had an interest in it. There are numerous examples in the disclosure of which I will give a few. At the very inception of the loan on 12 October 2011, having spoken to his brother, he e-mailed Mr Holyoake and referred to Mr Smith and Mr Williams as “my directors” when what he meant was the directors of CPC; in e-mails to his brother on 13 and 24 January 2012 he referred to “we” making £10m from a 4 month investment and “our

Then there are instances where Mr Nicholas Candy can be shown to have been consulted in decisions that were properly decisions for CPC. Again I will give only a few examples. In August 2011 an opportunity arose to acquire the London Heliport; on 10 August Mr Nicholas Candy, having just told the vendor’s agent that the potential purchaser would be CPC, e-mailed his brother, Mr Smith and Mr Ben David

Mr Stewart also referred to a promotional video which had been made for One Hyde Park, and comments on the video by Mr Smith (who had been CPC’s Head of Tax until August 2014) to the effect that it contained numerous statements which were unhelpful from a tax perspective, such as that “the Candys” are property developers, and that “the Candy brothers” needed a return on their money. Mr Smith explained that he was correcting factual inaccuracies, whereas Mr Stewart submitted that the comments in the video reflected the reality, which Mr Smith was trying to cover up.

In fact I think the video, and Mr Smith’s comments on it, are of no real assistance. Mr Smith, as Mr Stewart accepted, was very careful in his evidence, with an impressive recall of detail. He gave evidence that he had always had strong views about tax avoidance. Tax avoidance might be legal (as opposed to tax evasion which was illegal) but he personally had a strong aversion to artificial and highly technical tax avoidance schemes. He therefore took the view that it was necessary that the substance or reality of the transaction had to be such as to mitigate tax. I accept this evidence, and viewed against this background, it is not difficult to see why he should be concerned that loose and imprecise statements in the video such as that the Candys needed a return on their money did not accurately reflect the real position. In fact his main concerns seem to have been statements by Mr Christian Candy implying that he made all the decisions on One Hyde Park, whereas the true position was that the developer was a company called Project Grande Guernsey Ltd (“PGGL”), a joint venture between CPC and the former Prime Minister of Qatar in which CPC had a minority interest; and a statement by Mr Christian Candy that he had been on site every single week for 5 years, which Mr Smith described as very unhelpful (no doubt because Mr Candy was non-resident and there were limits on how much time he could spend in the UK without losing that status). Neither of these points would appear to have had anything to do with the true ownership of CPC.

The final strand in the Claimants’ case is that Mr Nicholas Candy is admittedly very wealthy but the source of this wealth is unclear. It is apparent from C&C’s accounts that although over the years it has generated enough money to pay Mr Nicholas Candy a reasonable salary, it has made little profit, and certainly not enough to sustain his lifestyle. His brother has made a number of substantial loans to him and in recent years three substantial gifts to him, one in July 2013 of £10m, and two in 2014 of a property called Gordon House and a penthouse at One Hyde Park, both properties being very valuable. Mr Christian Candy explained in evidence that he made these gifts as a result of a request that his late father had made to him, shortly before he died in September 2013, to share his wealth with his brother. Mr Stewart’s submission was that in reality they represented his brother’s share in the profit of CPC. Again I find this point of no real assistance. It is not disputed that the gifts took place. For a very wealthy man to share some of his wealth in this way with a brother to whom he is very close is not so extraordinary a thing as to suggest that the ostensible motivation must be rejected and some different explanation sought.

I have set out the material on which Mr Stewart relies at length because he put this point at the forefront of his submissions. Some of it seems to me of limited value as I have said, but some of the material is certainly quite striking. It is true that the focus of the trial was on the loan to Mr Holyoake, and that Mr Nicholas Candy both had a much closer relationship with him than his brother did, and had introduced the opportunity to CPC and felt he bore a responsibility for it; it is not surprising therefore that he was closely involved in this particular loan, and the fact that he was does not tell one very much about his involvement in CPC’s business generally. But that still does not explain how he came to refer to the £10m “we will make” or “our 30%”, which on any natural reading would indicate that he had a financial interest in the loan, not just a concern that he had been responsible for introducing his brother to it. And the evidence of Mrs Holyoake, who I have already said I found to be a credible witness, does suggest that Mr Nicholas Candy held himself out as a joint owner with

Nevertheless I am not persuaded that it is either necessary or appropriate for me to seek to resolve this question. Mr Stewart submitted that there were three reasons why the issue was important. The first was that it vindicated Mr Holyoake’s belief that he considered the transaction to be one with friends. But the true ownership of CPC does not seem to me logically relevant to what Mr Holyoake believed. That depends on what he thought, not what the true position was. For reasons given below I am quite prepared to assume that he may have thought he was in effect dealing with both of them. That does not require me to decide whether Mr Nicholas Candy in fact had any ownership interest in CPC or not.

The second reason put forward by Mr Stewart was that it demonstrated that Mr Nicholas Candy had a motive for entering into the conspiracy which the Claimants allege. Again this seems to me quite unnecessary. The evidence demonstrates that Mr Nicholas Candy took a close interest in the loan, and was as keen to see that it was repaid as CPC itself. Whether that was because he had a direct financial interest in the loan being repaid, or because he felt responsible for introducing CPC to the loan in the first place, or was simply because he wanted his brother not to lose out, does not matter; nor do I think it really assists in resolving whether he became party to a conspiracy to use unlawful means as alleged by the Claimants.

The third reason put forward by Mr Stewart (and said by him to be the most important) was that it demonstrated that there was a lie at the heart of CPC, which on the Claimants’ case was set up as a fraudulent scheme to evade very large amounts of tax for the benefit of both Candy brothers, thereby demonstrating the nature of their characters. On analysis that has nothing, or at any rate very little, to do with the issues in the case. In civil proceedings similar fact evidence is admissible in principle if it is logically probative of the issues (O’Brien v Chief Constable of South Wales Police [2005] 2 AC 53) but even if it were proved beyond doubt that the Candy brothers had committed a tax fraud, I do not see that this would provide any meaningful assistance in resolving the quite different allegations (conspiracy, intimidation and the like) on which these proceedings are based. No doubt as a very general statement a person who is shown to have committed fraud might be thought more likely to have committed other wrongdoing than an upstanding citizen, but that seems to me a long way removed from the sort of logically probative evidence that can be relied on as similar fact evidence. Proved or admitted dishonesty by a witness may also be relevant to credit, that is to whether their evidence is to be believed, but as I understand the law that does not allow a party to call evidence that goes merely to credit, and I do not think it permits a party to seek to prove a hotly contested allegation of dishonesty that has nothing to do with the facts of the case simply in order to discredit a witness.

In those circumstances I do not consider it necessary to resolve the issue. Nor do I think it would be appropriate to do so. Mr Lord submitted that it is in fact entirely clear that Mr Christian Candy is the sole legal and beneficial owner of CPC, placing particular reliance on Mr Holyoake’s own assessment of the position in an e-mail of 15 April 2012 to his then solicitors, Collyer Bristow, namely:

“Post the transaction Chris was the only person who I discussed the matter with. He appeared to be the sole decision maker and effective owner of the business…”

(As appears below this was one of a number of e-mails between Mr Holyoake and Collyer Bristow in which privilege was waived). He said much the same in another e-mail to Collyer Bristow of 16 April 2012 where he said he felt misled as he had believed that Mr Nicholas Candy was a co-owner, but from what he could see this:

“does not appear to be the case as he is not involved in any key decisions and cannot decide upon anything himself as one would expect if one was an owner.” But in the earlier e-mail Mr Holyoake also says:

“I believe but do not know for sure that CPC is co owned by Nick and Christian Candy”

Mr Lord submitted in the alternative that the issue was of such tangential relevance that it was disproportionate for the Court to investigate the ownership, and that it would be unfair to do so. The disclosure in these proceedings has been focused on CPC’s conduct in respect of GGH, and the Court does not have before it disclosure in relation to the hundreds of other transactions CPC has transacted. Any challenge to the evidence of the Defendants would require investigation of all of CPC’s business dealings. I accept this submission. Even in a case where similar fact evidence is relied on, the Court retains case management powers which may lead to such evidence being excluded: the Court’s overriding purpose is to promote justice but that requires that the trial process be fair to all parties, and it is necessary to weigh the potential probative value of the evidence against its potential for causing unfairness:

Mr Stewart asked me to find as a fact that Mr Nicholas Candy was a co-owner or partner in CPC. For the reasons I have given I make no such finding. He also asked me to find that Mr Holyoake believed as much, and entered into the loan agreement believing that he was entering into an arrangement with one of his closest friends. I accept that although Mr Holyoake knew that the loan was formally coming from CPC and not Mr Nicholas Candy personally, he thought he was dealing with his friend and his friend’s brother, and I am prepared to assume that he believed that both had an interest in the loan. I have already referred to his e-mail of 15 April 2012 where he said that he believed (but did not know) that they were co-owners of CPC, but even

Mr Stewart asked me also to find that Mr Nicholas Candy, even if not an owner of CPC, stood to benefit (and did benefit) as a recipient of substantial gifts and loans from his brother which must ultimately have derived from the profits of CPC, and so had an interest in CPC’s profitability even if he had no ownership interest in it. I accept that Mr Nicholas Candy did in the event benefit from gifts (and loans) made by his brother, and the likely source of those was the profits of CPC, but I do not accept that he “stood to benefit”. That would suggest that he had an expectation of benefiting, and for the reasons I have given I have not made any decision to that effect.

Some of the evidence called by the Claimants went to what might compendiously be called the Candy brothers’ style of doing business. Mr Hyman gave evidence from his time at C&C as to such matters as their relationships with employees, their attitude towards paying suppliers and their attitude to contractual terms. I do not propose to enter into these matters at all. None of them are of direct relevance to the issues in the action, or logically probative of the Claimants’ allegations; no particular reliance was placed on them by Mr Stewart in closing; and I have not found them of any assistance.

Mr Ian Roberts gave evidence about his experience with a start-up technology business that he founded called Crowdmix, and for which Mr Nicholas Candy, through one of his companies, provided significant financial support, being his greatest financial backer. At a critical moment, Mr Nicholas Candy declined to invest yet further funding unless certain terms were agreed and in due course the business went into administration; Mr Candy later bought its assets from the administrators. Mr Roberts feels very strongly that Mr Candy acted in an underhand manner in engineering the collapse of the business with a view to taking control of it. Mr Candy on the other hand gave an account in evidence of how Mr Roberts had been unrealistic in his attempts to raise further funding. Again I do not propose to resolve these matters. This case is not about the collapse of Crowdmix, and although Mr Roberts was eloquent in explaining why he considered Mr Candy’s actions to have been unacceptable, it would be wrong for me to attempt to reach any conclusions without a detailed consideration of such evidence as there is, and in my judgment to do that in circumstances where I have necessarily only been shown a small part of the story, only heard from two of the participants, and received very little in the way of submissions directed at these matters, would be potentially very unfair; it would also be disproportionate to any assistance I might derive from the exercise. What I take from Mr Roberts’ evidence is that he was patently sincere in his belief that he had been badly treated by Mr Candy; that I do not find of any substantial help in resolving the issues in this action, and other than that I am not prepared to go into these matters

It is more convenient to give my assessment of the Candys as witnesses below after I have considered one particular matter which Mr Stewart placed great reliance on, which is a series of e-mails between Mr Christian Candy and Mr Holyoake on 8 November 2011 which Mr Stewart characterised as containing a series of lies by Mr Candy (with the knowledge and encouragement of his brother).

I should record here however that I heard a very small part of the evidence in private; this was intended to show Mr Nicholas Candy in a distinctly poor light in relation to an unrelated matter, but I thought it likely that it would prove to be of no real assistance in resolving the issues in this action and was only designed to embarrass him. So it proved to be: I did not find this episode, unedifying though it was, of any help and have taken no account of it. It is not necessary to go into the details.

There was one other curious feature of Mr Nicholas Candy’s evidence which Mr Stewart placed some reliance on. On Day 23 (Friday 10 March) Mr Stewart asked him if he knew someone called Dominic Cooper-Smith. Mr Candy said more than once that he did not and that he had never heard of him, despite Mr Stewart prompting him that Mr Cooper-Smith was asking for payment for flights for guests travelling to Mr Candy’s wedding in Los Angeles. On Day 24 (Monday 13 March) Mr Stewart asked him again, by which time he had remembered that Mr Cooper-Smith was connected with an issue over flights to his wedding that his wife’s family had paid for but not received. Mr Stewart asked if he had threatened to send the boys round to Mr Cooper-Smith’s house, which Mr Candy denied; and later that day put to Mr Nicholas Candy an e-mail from Mr Cooper-Smith to Mr Candy dating from September 2012, which Mr Candy accepted he received, in which Mr Cooper-Smith said:

“Nick

I do not react very well to being threatened that you will send “the boys over to my house” nor that you will not pay invoices for flights that have been provided.”

Mr Stewart accepts that I cannot make any findings as to what happened between Mr Candy and Mr Cooper-Smith, but submitted that Mr Candy’s claimed inability at first to remember Mr Cooper-Smith’s name was surprising. One would have thought that to be accused of a threat like that would be very memorable. Either Mr Candy did in fact remember his name (in which case he lied to the Court when he said he could not); or if he did not, it suggested that he is so regularly accused of such behaviour that he cannot remember all his accusers’ names. I do not know, and do not intend to speculate, on the truth of the matter, but I accept that Mr Candy’s evidence on this left something to be desired, and I was left with the suspicion that I was not being told the whole story to the best of his recollection.

Mr Williams is a chartered management accountant. He joined C&C as Finance

He stepped down as director of CPC in March 2014. Since then he has continued to be employed by CPC, principally to oversee the completion of the One Hyde Park project until its eventual conclusion, but not on a fulltime basis.

Mr Williams had a close involvement in the GGH loan up to the end of March 2012 when Mr Dean took over that role.

Although he was uncomfortable at times when giving evidence, in general he gave his evidence in a straightforward and credible manner.

Mr Smith is a chartered accountant and chartered tax adviser. Until he stepped down as a director in August 2014, he was a director of CPC and in charge of the group’s Corporate Finance Activity and Head of Tax.

In August 2011 Mr Smith sustained very serious injuries when robbers attacked him in his house in the south of France and he jumped out of a first floor window to escape them. As a result he was in hospital, first in Nice and then in Wimbledon, until the end of November 2011, and off work for the remainder of the year, and when he returned to work in early 2012 was only working about 2 hours per day. His involvement in the GGH matter at the outset was therefore limited although he was copied into e-mails and sent some replies even when he was in hospital.

As already referred to, Mr Smith gave very careful and precise evidence, and had an impressive recall of detail. I found him an entirely straightforward and credible witness.

Mr Dean is a chartered accountant. He joined CPC in January 2007, and in February 2007 became Finance Director of CPC. He took over primary responsibility for the GGH loan from Mr Williams at the end of March 2012. He was a straightforward and credible witness.

Mr Benjamin David is also a chartered accountant. He started working for C&C in April 2005, initially providing support to Mr Williams (then C&C’s Finance Director) and Mr Cubitt. In October 2005 he moved to Guernsey to provide support to Mr Williams and Mr Smith, becoming a director of CPC in 2010. He too was another straightforward and credible witness.

GGH was on the market in 2010, and Mr Holyoake’s evidence was that he became aware of the possibility of buying GGH in 2010. That is not confirmed by anything in the documentary evidence, but he had certainly become interested by 8 March 2011 when an e-mail exchange between him and Mr Pym referred to a possible deal on GGH, Mr Holyoake saying that he had just had it confirmed that Mr David Pearl was the majority owner of GGH, with a Mr Alaa Ghanis (actually Ghani) also having an interest. By 10 April 2011, a financial appraisal had been prepared for Mr Holyoake based on a mixed use development of GGH (retail on the ground floor, residential above) and a purchase price of £38m: this projected total costs of some £92m and a developed value of some £169m, delivering a profit of over £77m.

In May Mr Holyoake sought to interest Mr Nicholas Candy in the property, inviting him to a meeting at his offices on 10 May (which he went to with Mr Simpson of C&C – they went on to have a quick look at GGH) and having the appraisal sent to him; Mr Nicholas Candy forwarded it to his brother with the comment “Very interesting deal”, and replied to Mr Holyoake “Love it”. Mr Christian Candy’s own initial view was that he quite liked the proposal and he spent some time looking at it, having his own appraisals prepared internally. He made encouraging noises to Mr Holyoake, for example on 24 May asking “Does he [Mr Pearl] know CPC is your partner?”, and on 26 May “What law firm are we going to use?” but nothing was formally agreed, and by 7 June he was expressing the view internally that he was against participating. On 16 June he e-mailed Mr Holyoake to the effect that he had spoken to his brother and CPC was unfortunately not interested, the upside not being large enough and the biggest risk being English Heritage. Mr Holyoake said in oral evidence that he was surprised by this as previous conversations were exceptionally positive, but he accepted that they had a right to say Yes or No.

Mr Stewart asked me to find that as a result of the site visit and the appraisals the Defendants had a good knowledge of GGH and its potential for profit. That seems to me to overstate the position: they had done some preliminary work, as a result of which they concluded that it might make money but there were risks, and it was not an attractive enough proposition to wish to invest in. Mr Stewart also asked me to find that Mr Nicholas Candy knew that Mr Holyoake was not a man of straw, and it is wrong to say that the loan was made without any due diligence on him. I do not make that finding. Mr Nicholas Candy as Mr Holyoake’s friend may have had a general impression of his wealth (or at any rate his standing of living, which is not necessarily the same thing), but at the time of the loan, neither he nor anyone else on the Defendants’ side had investigated it at all.

By the time Mr Christian Candy withdrew from the proposed purchase Mr Holyoake had already made an offer on GGH. He had initially hoped to do a deal whereby he paid only £30m upfront with further overage payments after planning permission had been granted, but the vendors made it clear they wanted an unconditional sale at £40m. That was more than Mr Holyoake wanted to pay but after an offer of £38.1m had been rejected, he offered £40m on 21 May, which was accepted on 24 May.

On 9 June Mr Richard Doffman, who was acting on behalf of the vendors, e-mailed Mr Holyoake noting that their lawyers had twice asked for his source of funding without having had a reply and asking him to confirm by return. Mr Holyoake replied the same day:

“In regards to funding this is already in place what do you need and I will provide”

On 13 June he sent Mr Doffman some background information on himself and his other properties. Mr Doffman replied the same day saying that he was expecting something more specific in relation to the funds being used to purchase GGH, that he had to satisfy the trustees who were the JV partner, and that he must insist that Mr Holyoake provide specific information. Mr Holyoake replied by return (at 09.17):

“In regards to funding we have a bank facility in place from Investec 70% loan to value – and the equity will be coming from myself. This is all in place and ready to go.”

These statements were not true. The true position was that Mr Holyoake at that stage had approached Investec and that on 7 June Mr Jonathan Arnst of Investec had sent him an e-mail referring to a proposed funding structure under which Investec would lend £26m for a term of 3 years at 4.5% over LIBOR. The e-mail however made it clear that it was for discussion only and did not constitute a formal offer of funding. At 08.00 on the morning of 13 June (that is shortly before his e-mail to Mr Doffman) Mr Holyoake told Mr Christian Candy that he would be speaking to the bank at 3pm, and at 14.30 he e-mailed Mr Arnst with some further information (a planning letter) and asked him if he thought credit approval would be forthcoming at the end of the week. This to my mind establishes that Mr Holyoake was fully aware that the proposed facility had not yet been approved by the bank’s relevant credit committee, and could not be said to be “in place” and “ready to go”. Nor for that matter was it accurate to say that the loan was 70% loan to value: Investec was at that stage considering a proposal to lend £26m on a purchase price of £40m, which is 65%. Mr Holyoake was asked about this in cross-examination and said that he had been given a clear steer that they were good to go with Investec but accepted that he had not received credit approval at that stage and that he was exaggerating the position.

Nor was it correct to say that the equity would be coming from Mr Holyoake himself. At a purchase price of £40m, there would be a further £14m needed to complete the purchase (plus costs and stamp duty), and Mr Holyoake did not have that kind of money to hand. He was in fact in the middle of seeking to persuade a Mr Ranjan, who had connections with the Petchey Group, that the Petchey Group should contribute mezzanine funding to the project. The proposal was that they should provide funding, to rank after the bank debt but before equity, in return for interest and a share of profits. Mr Holyoake’s initial suggestion was that the Petchey Group contribute £20m, to rank after a bank facility of £25m; by 11 June this had become a proposal that they provide £15m of funding to rank after debt of up to £27.5m, in return for interest of 15% per annum and 25% of profits. Mr Ranjan had invited Mr Holyoake to progress this proposal, but it had not been agreed and on the afternoon of 13 June Mr Holyoake was e-mailing Mr Pym to the effect that if Mr Pym did not hear from Mr Ranjan, they should maybe have a call with him that evening “because I

Mr Doffman evidently returned to the question, as on 23 June Mr Holyoake asked Mr Pym to send a letter to Mr Doffman on the headed notepaper of TPO. As set out above, Mr Holyoake was closely involved as an actual or pending majority shareholder in TPO; the letter which he drafted for Mr Pym however referred to TPO as a regulated financial advisory and wealth management business that assisted a large number of high net worth individuals, and to Mr Holyoake as one of their clients who had instructed them to provide corporate advice and assistance in regards to his intended purchase of GGH, and said nothing about Mr Holyoake being a part-owner of the business as well as a client, being written as if his relationship with TPO was merely that of one of many clients. The draft had TPO confirming that:

“Mr Holyoake has all the funding in place to complete the transaction within 45 days of exchange at a purchase price of £40m”.

A letter along these lines appears to have been sent (although it is not in evidence) as on 27 June Mr Holyoake asked Mr Pym to send Mr Doffman a second letter, again drafting a suggested text for him, and this letter referred to the previous one. Mr Pym sent it to Mr Holyoake in the form Mr Holyoake had drafted, and Mr Holyoake forwarded it to Mr Pearl and Mr Doffman at 16.00 on 27 June. It said:

“We reiterate that Mr Holyoake has the funding requirements in place and we confirm that such bank funding is being provided to him at the level of £27.5m and that further funds of £15m are immediately available to Mr Holyoake for the purposes of completion and costs. These funds are being provided substantially by ourselves via our regulated fund business together with funds from Mr Holyoake himself.”

These statements were again untrue. Although Mr Holyoake had succeeded in obtaining indicative heads of terms from Investec on 14 June (for a loan of £27.5m at 4% over LIBOR), the proposed loan had still not gone through the credit process, a formal UK credit committee meeting being due on 29 June. The credit process was evidently not going to be a formality as Investec had continued to ask Mr Holyoake some quite difficult questions: on 13 June Mr Arnst had e-mailed Mr Holyoake saying that they needed to understand where the cash equity requirement was coming from, that it was not clearly evident from the net asset position he had disclosed and that it would “no doubt be a key focus of the credit process” given the size of the transaction and the personal recourse that had been proposed; by 22 June Investec had asked Mr Holyoake for the last 3 years’ accounts for ISI and Mr Holyoake was sufficiently concerned to ask Mr Wells to think about how they could show them as it was very important that it was very profitable, following that up with a suggestion that maybe the previous owner had taken a big salary or dividend or a big management charge; and on the morning of 27 June (at 10.15, that is about 6 hours before Mr Holyoake forwarded Mr Pym’s letter of 27 June) Mr Simon Brooks of Investec had told Mr Holyoake that they were hoping to run through the deal with a couple of the credit guys ahead of the formal credit committee meeting so that they did not see it cold, so

It was therefore incorrect to say (on 23 or 27 June) that the funding was “in place”, the Investec loan being dependent on approval being obtained. Nor was it correct to say that Mr Holyoake had a further £15m “immediately available”, being provided substantially via TPO. Mr Pym had suggested to Mr Holyoake that TPO might circulate its clients and contacts with an opportunity to participate in a syndicated loan note in the sum of £15m, but there is nothing to suggest that this sum or anything like it had in fact been raised. Mr Pym in evidence said that TPO had set up a so-called SICAV fund in Malta, and had had verbal commitments to fund it to the tune of £15m. That does not seem to me to justify a statement that Mr Holyoake had £15m immediately available to him, and the £15m was not in fact available at completion when he needed it.

Mr Holyoake was asked about these letters in cross-examination. He denied they were misleading, and said Mr Doffman’s request was unfair; he also said he had been assured by Mr Daniel Austin of Investec that there would be no problem. I am satisfied he is wrong about the latter point as Mr Austin did not return from holiday until the morning of 28 June; and I conclude that he was deliberately overstating the position to Mr Doffman because he did not want to tell him the truth, which is that he had had promising discussions with Investec which had led to indicative heads of terms but these had not been approved by the bank’s credit committees and he was not yet in receipt of a formal offer.

On 4 July Mr Holyoake asked Mr Pym to send a third letter to Mr Doffman, again drafting it for him, and again Mr Pym duly signed it as drafted. This said:

“We confirm again that we have provided Mr Holyoake with a mezzanine financing facility of up to £15m GBP that is available from our fully regulated property and project finance fund.”

There is no reason to think that this was any more true than the previous confirmations.

Mr Doffman was still not satisfied and spoke to Mr Holyoake on the evening of 4 July and to Mr Holyoake’s solicitor, Mr Philip Saunders of Saunders Bearman LLP, on the morning of 5 July. At 09.15 on 5 July Mr Saunders sent Mr Doffman an e-mail saying:

“It has been confirmed this morning that Investec Bank Channel Islands are issuing to my client a formal mortgage offer on the lines and for the amount of ‘Indicative Terms’ which you have previously seen.”

That would also appear to have been quite untrue. The application had gone to the UK credit committee on Wednesday 29 June, and was due to go to the global credit committee in South Africa on Friday 1 July. But despite the fact that on Tuesday 28 June Mr Austin had told Mr Holyoake that they were all very supportive and he did not perceive any major issues, and was comfortable that the credit would be agreed, the global credit committee did not in fact reach a conclusion on 1 July; it met again

Mr Doffman however replied at 10.25 to the effect that the proof of funding provided had throughout been non-specific and vague and he was instructing their solicitors to withdraw the papers. Mr Holyoake increased his offer to £42m. On 6 July Mr Austin told Mr Holyoake that he had pushed hard but could not get the ok to write the loan, and on 8 July that he must now admit defeat; he offered to introduce Mr Holyoake to another lender, Topland, who would charge 1-1.5% per month.

On 9 July in the course of an e-mail exchange with Mr Nicholas Candy, Mr Holyoake told him that he still not exchanged on GGH and that the price was now up to £42m. Mr Nicholas Candy passed this onto his brother with the comment “Look at price Mark is paying”, to which Mr Christian Candy replied “Crazy. He will struggle with this site in my opinion.”

In the event Mr Holyoake’s offer of £42m was accepted, and contracts were exchanged at that price on 18 July 2011. By that stage Mr Holyoake had no confirmed funding with which to complete. He had had an initial offer from Topland of a loan of £25m at 1.25% per month, but terms had not been agreed (Mr Holyoake regarding this as very expensive) and he was exploring the possibility of other banks. For the balance he had a number of possibilities but nothing firmly in place.

Under the contract for sale a deposit of £3m was payable, £2m on exchange and a further £1m by 29 July 2011, and completion was due on 16 September 2011. The contract incorporated standard conditions of sale which provided in the familiar way for the vendor to serve notice making time of the essence in the event of the buyer failing to complete on the due date.

The buyer under the contract was Hotblack. The structure for the ownership of GGH had been provided for Mr Holyoake by a business called Caversham SA, and consisted of Hotblack, which was wholly owned by a BVI company called Greenlander Ltd (“Greenlander”), which was in turn wholly owned by another BVI company called Dorry Holdings Ltd (“Dorry”), the two issued shares in which were held by two nominees for Mr Holyoake. None of Hotblack, Greenlander or Dorry had any other business or interests except GGH. An e-mail of 3 August 2011 from Mr Andrew Crichton, the Executive Chairman of Caversham, to Mr Holyoake explained that they had given the structure a number of levels so that shareholders could be introduced at the appropriate level. Mr Holyoake also gave evidence that he thought there was some tax reason, but this was not explored further and I did not really understand the point; nothing turns on it anyway.

Mr Holyoake set about trying to tie down the funding to complete the purchase, that is both the senior debt and the balance. So far as the senior debt was concerned, Investec was in the event interested in participating alongside Topland and Mr Holyoake in due course accepted an offer of a loan from Investec and Topland together of £24m (£15m from Topland and £9m from Investec), of which £1.8m was to be retained in an account at Investec, for a term of 12 months from drawdown, at an interest rate of 1.25% per month. Although this was a joint Topland/Investec facility, Investec acted as the agent for the lenders and I will refer to it as “the Investec facility”.

So far as the balance needed to complete was concerned, he had a number of potential leads that he followed up; he did receive various proposals but thought them expensive. Then on 7 August 2011 Mr Ranjan forwarded to him a proposal from a Mr Yaser Martini who had a Saudi investor who would be prepared to inject £7.5m into the deal in return for interest of 15% per annum and 15% of the profit, a proposal that Mr Holyoake was happy to accept in principle subject to negotiation of certain ancillary terms. This in due course was agreed and a facility of £7.5m was made available to Hotblack as mezzanine financing through the investor’s vehicle, which was Oscarone.

Mr Holyoake had not however finalised everything in time for the contractual completion date of 16 September. On 28 September the vendors’ solicitors (in fact by then acting for receivers who had been appointed over GGH by the vendors’ bank, although nothing turns on this) served a notice to complete under the terms of the conditions of sale, the effect of which was to require completion within 7 working days, that is by Friday 7 October.

Meanwhile a further payment was due to 3i under the Overarching Agreement. Mr Holyoake had sold the commercial part of 42-44 Grosvenor Gardens in August, which enabled him to pay £2.15m to 3i, but a further £3.2m was due on 8 October. On 29 September Mr Holyoake e-mailed Mr Kevin Dunn, the general counsel of 3i who was dealing with the matter, asking for a 30-day extension to enable him to sell the mews property at 42-44. Mr Dunn said he would get back to him, but before he did so, an article in Property Week from 16 September came to his attention. Under the noticeable headline “Former British Seafood boss dives for Pearl’s jewel” this reported that Mr Holyoake had bought GGH and that “it is understood that Holyoake paid around £42m” for the building, and that his asset management company Medici was believed to be considering a conversion to residential. That led Mr Dunn to e-mail Mr Holyoake on 4 October asking him to explain:

“1.

Why, if you were able to invest £42m in a new property investment, is it that you are now requesting an extension of time to meet your payment obligations under the settlement deed?

2.

The settlement deed (clause 2.2) makes it very clear that you will pay the settlement instalments on the due dates – and that you will “in any event use all reasonable endeavours to pay, or procure the payment of, these amounts before these due dates.” Please help me understand in what way your choice to make an investment in 35/37 Grosvenor Gardens was consistent with this obligation?

3.

The source of your funding for the £42m investment at 35/37 Grosvenor Gardens.”

Mr Holyoake replied the same day:

“I am afraid that is the press making a good story.

I am acting if the deal actually happens (as it has yet to despite the press report) as the managing company for the project – we have developed 42/44/46/48 Grosv Gdns as you know and as such have negotiated a role to oversee development going forward of this project which is located in the same area and in which we have considerable experience. The aim is for me to oversee the development using our knowledge and get paid for this role.”

Mr Holyoake was asked in cross-examination about this, and gave an explanation that what he was seeking to put over to Mr Dunn, without spelling it out, was that he had not put £42m cash into the project. I regard that as a disingenuous answer. The article did not say, or suggest, that he had paid in cash, and it is clear that Mr Dunn was not asking if he had. That would no doubt have been a most unusual way to purchase a £42m property and if Mr Dunn was really asking if Mr Holyoake had done so, he would have said so in terms; in any event his third question expressly asked for the source of Mr Holyoake’s funding. Mr Holyoake’s e-mail to Mr Dunn was plainly intended to suggest that the article was inaccurate, to deny that he had bought GGH for £42m, and to convey the message that his only role in the proposed development was to act for a fee in overseeing a development by someone else. As such Mr Holyoake’s e-mail was grossly misleading and I conclude that Mr Holyoake deliberately misled Mr Dunn to put him off asking awkward questions at a time when he was under some pressure to complete the contract, and did not have the funds to make the payment due to 3i.

Under the notice to complete, completion was due on Friday 7 October. Mr Holyoake was still not in a position to complete and as a result an agreement was entered into on 7 October amending the contract. This required Hotblack to pay immediately an additional deposit of £100,000, forfeited the increased deposit of £3.1m, and gave Hotblack a further opportunity to complete the contract by 3pm on Friday 14 October at an increased price of £43m (with a reduction to £42.5m if completed by 2 pm on Wednesday 12 October), failing which the contract would automatically be rescinded. It also required Mr Holyoake to give a personal guarantee for £1m if the contract had not completed by 2pm on Monday 10 October.

At this stage Mr Holyoake had available to him the £24m Investec facility, and the £7.5m mezzanine loan from Oscarone. But after allowing for various deductions for arrangement fees and legal costs and the like, and the retention of the £1.8m in the Investec account, these only gave him net monies available for completion of about £21.8m and £7.2m respectively, or some £29m in all. The money required to complete at a price of £42.5m, after taking account of the £3.1m deposit and various apportionments and other adjustments, was about £39m, so that still left him about £10m short, not counting his own costs and stamp duty.

He did not however have the cash required; indeed on Sunday 9 October he told Mr Wells that he was waiting for “billys money”, this being a reference to a man called Mr Billy Allen who had been introduced to him by Mr Pym. Mr Allen claimed to be very wealthy and to be interested in participating in GGH, and at various stages promised to produce large sums, but he never did provide any funds and turned out to have a serious criminal record: see Allen v Matthews [2007] EWCA Civ 216 at [6] where Lawrence Collins LJ refers to his serving two periods of imprisonment for fraud and assault. Mr Lord spent some time in cross-examination exploring the issue of the proposed participation of Mr Allen, which had not been referred to at all in the Claimants’ witness statements. In particular, on 2 September 2011, at a stage when Mr Holyoake was expecting Mr Allen to participate, he had e-mailed Mr Pym to the effect that he didn’t want to mention Mr Allen’s participation to the bank (that is, Investec) as if they had to do KYC (know your customer checks) on him they would never get a loan, to which Mr Pym replied “True enough”; on the basis of this it was suggested to them that they had both known of Mr Allen’s dubious past. Mr Holyoake denied it, asserting that all that he knew was that Mr Allen had had considerable difficulties passing KYC checks when a client of Mr Pym’s at Crédit Suisse, although he did accept that he had decided not to make any reference to Mr Allen in his witness statement, despite referring to a fair number of potential funders, and that he had done so because he felt embarrassed once he discovered the truth about him. Mr Pym accepted that he had introduced Mr Allen to Mr Holyoake, and said that he too did not know about his criminal record, but said that Mr Holyoake was wrong to think that Mr Allen had ever been a client of his or gone through KYC. On this evidence I am left quite unsure what the truth of the matter is. I am prepared however to give Mr Holyoake and Mr Pym the benefit of the doubt and I therefore do not find it proved that they actually knew of Mr Allen’s criminal record; but on any view they were willing to arrange Mr Allen’s anticipated participation in the project in such a way as to deliberately conceal it from Investec.

Over the next few days Mr Holyoake repeatedly claimed that the funds to complete were on their way: on Friday 7 October he told Mr Brooks of Investec that the delay on funding was simply because he was in Hong Kong and would be resolved on Monday; on Monday morning (10 October) that he was back from Asia and had arranged for the relevant original instruction to be sent by courier and that they would complete no later than Tuesday morning; on Monday afternoon that a signed transfer request was in the UK and would be with Citibank (one of his bankers) very shortly and that completion would be first thing on Tuesday; on Tuesday morning (11 October) that the instruction had been received at the other end, that all was on course for completion that day and that Mr Saunders would be in funds “in next few hours”; and later that morning that funds were “on their way”; finally on Tuesday afternoon Mr Saunders told Mr Brooks that he understood – I infer from Mr Holyoake – that the

Whatever possible sources of funding he had been hoping for previously, Mr Holyoake accepted in evidence that by 12 October he had run out of any realistic alternative. So it was that he turned to the Candy brothers.

Over the course of some 30 hours or so from the morning of 12 October to the early afternoon of 13 October, the loan from CPC was negotiated and finalised, and the purchase of GGH completed. There are a large number of e-mails in evidence; it has not been entirely straightforward to disentangle the precise chronology because although all the e-mails have time-stamps, the times are not internally consistent. This is partly because different participants were in different time-zones (Mr Holyoake in Ibiza, Mr Nicholas Candy, the lawyers on both sides and Mr Williams (initially) in London, Mr Christian Candy in Los Angeles, Mr David (and Mr Williams later) in Guernsey, and Mr Wells in Switzerland), but partly because of some technical issue with the time-stamps which meant that the same e-mail has different times in different iterations. I heard no technical evidence and this issue was never fully explained, but, with the help of some detailed analysis by counsel, it is I think possible to reconstruct the order of events with some confidence. In the account which follows the times which I give are those which I believe represent the time in London, which was British Summer Time (that is GMT + 1 hour); Guernsey was then on the same time, Ibiza and Switzerland 1 hour ahead, and Los Angeles 8 hours behind.

It is necessary to give a detailed account of the exchanges, although most of the to-ing and fro-ing appears from the e-mails and is not in dispute. There are two significant areas of dispute that do however fall to be resolved: one is whether Mr Williams made a fraudulent misrepresentation to the effect that Mr Holyoake’s net asset statement was being sought as a formality and would not be relied on; the other is what, if anything, was said about keeping the CPC loan confidential, in particular from

The story starts with an e-mail from Mr Holyoake to Mr Nicholas Candy at 09.36 on 12 October, confirming a discussion he had already had with him, in which he asked for a personal loan of £12m, saying that it was needed that day and that he understood that it was probably too short notice, but offering terms of 20% interest (per annum), no specific term (“up to you 6 months would be ideal or longer if you want to get interest on these funds”), an extra “kicker” of 20% GGH profits via a declaration of trust (“happy to also consider minimum fixed sum if that helps ie £10m”), and a “PG” (personal guarantee) from him for the full amount plus interest. Since what Mr Holyoake was suggesting was a loan to himself, the reference to a guarantee was not technically accurate but he (and others) used this as a shorthand for his personal liability for the loan.

Mr Holyoake did not tell Mr Candy that they were his last resort, instead presenting it as a “contingency plan” should his existing lender fail to come through (“as they were supposed to be in funds today”); he later added plausibility to this by offering to arrange something meaningful as a thank you if “the transfer from mezz comes in”, subsequently quantified as £1m if he did not need to use CPC’s moneys but used “the Saudis” instead. That indicates that what he told the Candys was that he was expecting mezzanine finance from a Saudi source, that he still hoped they would deliver and that the CPC loan was merely a back-up plan. In February 2012 he told Mr Pym that he had been thinking of the Al-Rajhi family, and he confirmed this in oral evidence. The Al-Rajhi family had indeed been approached by Mr Lovering and had shown some interest in investing in GGH. But I have seen nothing to suggest that by 12 October Mr Holyoake had been actually expecting funds from them to complete: Mr Lovering was still trying to push them to conclude an agreement on 16 October (and was described by Mr Pym on 18 October as getting frustrated with their speed of reaction), and Mr Holyoake accepted that they never in the event committed any funding. Mr Lovering’s own evidence was that their decisions were normally made very quickly, but this took longer and nothing came of it, and that although a proposition was put to them, for various reasons it didn’t happen. I conclude that the suggestion that funds were expected from them and that the CPC loan was needed as a back-up was another stretching of the facts by Mr Holyoake, no doubt to avoid looking too desperate.

Mr Nicholas Candy promptly forwarded the offer to his brother, commenting “This could be a great deal for us”, and at 11.00, having spoken to his brother in Los

Mr Nicholas Candy in his 11.19 e-mail described the loan as one that would “effectively be the mezz piece in your deal”, and Mr Holyoake did not correct him when replying. This illustrates something that was not disputed, namely that Mr Holyoake did not tell the Candys about the Oscarone loan on 12 October, or subsequently. Indeed as already referred to Mr Holyoake did not reveal the Oscarone loan to the Candys during the almost 2½ years the loan was outstanding, at one point taking active steps to fabricate documents so as to conceal Oscarone’s participation from them, and continuing to lie about Oscarone even after the proceedings were brought.

Mr Stewart asked me to find that the existence of Oscarone did not cause any significant prejudice to CPC’s position; that CPC, although unaware of Oscarone’s involvement as at October 2011, were well aware that Mr Holyoake would be seeking funding other than from just the senior lender and CPC (because it was obvious); and that it was not necessary to disclose the involvement of Oscarone at the outset as CPC was making a personal loan to Mr Holyoake and must have been aware that he would have been seeking diverse sources of funding for GGH.

I do not consider that any of these findings is justified. I find that CPC thought that the only other lending taken out for the acquisition of GGH was the Investec facility, and that although lending to Mr Holyoake personally they were effectively replacing a mezzanine funder. I also find (as evidenced below) that CPC would not have made the loan if they had known about Oscarone; and that the existence of the Oscarone loan significantly prejudiced their position.

The same e-mail also made it clear that the loan would be coming from CPC, not from either of the Candys personally. Again there is no dispute that Mr Holyoake understood this – for example at 11.53, at a stage when he envisaged that the loan would be made initially on the basis of binding heads of terms (with full documentation to follow), he asked Mr Nicholas Candy for “CPC full address for heads”, and Mr David, who was tasked with progressing the loan in Guernsey, duly provided him with both a correspondence address and the registered address, both in St Peter Port, Guernsey. Again when Mr Saunders provided a letter addressed to Mr Nicholas Candy, referring to him sending £12m as a loan and undertaking to hold the monies “to your order”, Mr Williams picked up that the letter was wrong as it was CPC not Mr Nicholas Candy that was making the loan; Mr Nicholas Candy then sent an e-mail to Mr Saunders’ secretary, copied to Mr Holyoake, asking for the letter to be rewritten and addressed to CPC, emphasising “It is not me sending the money…I am NOT personally involved other than in an advisory capacity”; the revised letter was duly sent, addressed to CPC, and then a further revised version giving CPC’s registered address, and marked for the attention of Mr Williams and Mr David. That enabled the funds to be transferred and at 13.02 they were sent to Saunders Bearman to be held to CPC’s order pending finalisation of the terms (although perhaps characteristically Mr Holyoake had texted Mr Brooks of Investec as early as 12.43 confirming that they were already with Mr Saunders); Mr Saunders sent the funds on to the vendors’ solicitors (DLA) where they had arrived by 14.48 at the latest. (Mr Saunders did not regard this as in breach of his agreement to hold them to CPC’s order, as DLA were themselves holding the funds to his order pending completion; I do not intend to resolve if he was right about that or not).

It will be recalled that under the contract of sale as amended the price went up from £42.5m to £43m if not completed that afternoon, and Mr Holyoake was therefore anxious to finalise the loan and complete the purchase before the deadline (initially 2pm but extended to 3pm). He had therefore hoped that the loan could be made on the basis of some quite short but binding heads of terms. But CPC instructed their solicitors, then called Wragge & Co LLP (“Wragges”), and by 13.15 Mr Christian Candy was telling Mr Holyoake that Wragges wanted different documentation; and it was then agreed that Wragges would draft loan documentation, and Saunders Bearman would draft declarations of trust in respect of the profit share, and in due course it became apparent that the 3pm deadline could not be met.

In the meantime CPC had raised the question of Mr Holyoake giving a net asset statement. The first suggestion to this effect came in an internal e-mail from Mr David to the Candy brothers and Mr Williams at 12.24. He attached Mr Christian Candy’s e-mail of 16 June in which he had told Mr Holyoake that CPC was not interested in GGH because of the risks involved. He pointed out that putting CPC’s

Mr Christian Candy replied at 12.39 that he agreed with Mr David’s suggestion, and asked his brother “are you Ok for me to ask this from Mark?”; and then at 13.50 e-mailed Mr Holyoake to the effect that he did not like asking but since the loan was personal to him, CPC needed to understand his net asset statement and what personal guarantees he had given, asking him to provide this before any drawdown. He confirmed that the information would stay confidential to CPC group, and even be kept from Mr Nicholas Candy if Mr Holyoake requested. He followed this up at 14.01 with a request for a second charge on one of Mr Holyoake’s assets with enough equity in it to cover the loan and 2 years’ interest, his Ibiza house being CPC’s preferred choice; he described this as “a big issue to CPC, and I think fundamental to the loan.” Mr Holyoake said in evidence that he regarded this as Mr Christian Candy “pushing the envelope”, that is attempting to improve the terms of the deal. He replied at 14.04 rejecting both the request for a net asset statement (“can we discuss have some sensitivities around this and don’t feel for this sum its needed”) and the request for a second charge, offering instead a second charge only in the event of a default on an asset to be chosen by him so long as it provided coverage of 125% by value.

There was then a telephone call between Mr Holyoake, Mr Christian Candy and Mr David at about 14.15, and it was agreed that Mr Holyoake need not provide a net asset statement. When Mr Chris Gayle, a solicitor at Wragges, circulated a first draft of the loan however (at 14.52), it included an obligation on Mr Holyoake to provide CPC with a net asset statement and liability schedule quarterly; Mr Holyoake replied (at

Mr Holyoake also queried the provision of a second charge (which he wanted to provide only in the event of default, not, as drafted, within 60 days) and suggested a call. Mr David set up a call which initially took place between himself, Mr Williams and Mr Gayle. The call started some time between 16.16 when Mr David set it up and 16.58 when Mr Nicholas Candy e-mailed Mr Holyoake. Mr Nicholas Candy was not himself on the call (nor was his brother who was by then in a meeting in Los Angeles, having apparently been up most of the night) but both he and Mr Williams gave evidence that Mr Williams was in his offices in London and joined the call from there. In his e-mail Mr Nicholas Candy said “the guys” were still on the call, and then said:

“Mate, we can’t do a £12 million loan without full security. This means second charge and understanding of net asset statement.

We have been burnt in the past and so this is not personal just belt and braces.”

He then asked Mr Holyoake to jump onto the call. Mr Holyoake did so, and agreement was then reached. It was recorded in an internal e-mail from Mr David at 17.53. It provided for Mr Holyoake to provide within 5 days of closing three specific matters including:

“net asset statement signed by reputable auditor/lawyer/bank”

(the others being a lawyer’s letter confirming that the declaration of trust was not in breach of the Investec loan, and a Jersey legal opinion that Hotblack had full power to enter into the loan agreement); it also made provision for Mr Holyoake to provide a second charge if he had not repaid the loan in full (with the 2 years’ interest) within 6 months; and it provided:

“Requirement to maintain min net assets of £120m to remain.”

Mr David asked Mr Gayle and Mr Williams if he had missed anything; there is no trace of any reply suggesting that he had. Mr David then (at 18.23) asked the Candy brothers if they were happy with what had been agreed. Mr Nicholas Candy replied (at 18.57) that he was; Mr Christian Candy was not entirely happy, pointing out (at 19.26) that CPC was at risk for 5 days and querying why CPC had to wait 6 months for a second charge. Mr David replied to him (at 19.37) that they had 5 days with no confirmation of net wealth or validity of profit share and that if Mr Holyoake failed to provide these, they were into default and would go after his guarantee; the 6 months had been suggested by Mr Holyoake as he needed time to get a dividend out of one of his businesses; they were at risk and reliant on his guarantee until they got the second charge, but this position was reflected in the pricing/profit upside. The key call was whether Mr Candy trusted him and he was a man of substance. Mr Candy replied (at 20.30) that he was fine but asked Mr David to squeeze the 6 months to 4.

Meanwhile (at 19.51) Mr Gayle had circulated a third draft of the loan agreement. This contained the obligation on Mr Holyoake to maintain the Minimum Net Asset Cover (now defined as meaning £120m), and new obligations to grant a second charge if the loan were not repaid in full by 12 April, and to provide within 5 business days a net asset statement signed by a firm of accountants or lawyers or bank certifying that Mr Holyoake had net assets not less than the Minimum Net Asset Cover. Mr Holyoake (at 20.07) raised a couple of queries and also asked for a confidentiality clause as follows:

“finally bearing in mind the nature of information to come over can we have a confidentiality clause – saying the terms of this agreement will remain confidential and not released without the others permission unless in the event of default etc and the information provided ie net assets statement particularly etc will equally be treated in complete confidence and not released without express permission – sorry not worded v well but hopefully the point is clear.”

Otherwise he was ok with the document and happy to execute it. Mr David (at 20.15) raised some minor drafting comments, including the addition of the words “established and reputable” in front of “accountants or lawyers” in the net asset statement provision, to which Mr Holyoake replied (20.24) that he was fine with all Mr David’s points (including this one).

Mr Gayle drafted a confidentiality clause and there was some negotiation over its terms and other fine-tuning; Mr Christian Candy then went through the documents and discussed them on a call (at about 20.55) with Mr David and Mr Williams; Mr Holyoake and Mr Gayle were then invited (at 21.10 – this e-mail for unexplained reasons has time-stamps of 20.10 and 22.10 in different iterations but must I think actually be 21.10) to join the call on the basis that there were only a couple of points left to agree. Agreement must have been reached on all outstanding points as the next event was that Mr Gayle (at 22.13) circulated a clean copy of the loan agreement for signing if finally approved. The obligation to provide a charge was now to arise if the loan and interest had not been repaid by 12 March 2012 (that is after 5 months, so representing a compromise), and was to be granted within 30 days over Additional Property, this being one or more properties shown on a list of properties to be included in the net asset statement; in addition there was a negative pledge under which Mr Holyoake agreed not to grant any further security, beyond that already existing, over any such property; the net asset statement provision was included, with the additional words “established and reputable” as agreed. Mr Holyoake replied (at 22.26) that he was happy to execute if Mr David and Mr Williams were happy it was in final form.

At 22.23 Mr David e-mailed Mr Williams to the effect that they did not need to sign anything that night, they just needed to agree the document, for Mr Holyoake to sign, and for them to instruct his lawyer to release the funds. Mr Williams replied at 22.31 agreeing, and adding “I’ll have a glass of wine then”; he was by then at home in Guernsey, having flown back from London in the early evening, and his concern was that if had to sign documents that evening, it would have meant driving into the office.

At 22.54 Mr Holyoake asked again if there were any comments “or is it ok to sign ?”; Mr Williams replied (at 23.07) that he had spoken to Mr David and they were happy with it, and asked him to sign and scan back; Mr Holyoake replied (at 23.10) that he would do and he would be 5 minutes. At 23.12 Mr Williams e-mailed Mr Holyoake to say that a small amendment was required; Mr Holyoake replied (at 23.16) accepting the change and asking Mr Gayle to amend and recirculate, but at 23.36 Mr Williams replied that having spoken to Mr Gayle the document was fine as it was.

By this stage the documents (the loan agreement and two declarations of trust) were in final form, and there were no further changes, and Mr Holyoake signed and sent them back at 23.53. It took however several attempts, and quite a long time, before they were all finally executed to Mr Gayle’s satisfaction – there were difficulties over the execution of the declarations of trust, which required to be signed twice, once by Mr Holyoake himself and once on behalf of Hotblack, and both signatures needed to be witnessed, which in the end Mr Holyoake got Mr Wells to do (despite the fact that he signed them in Ibiza and Mr Wells was in Switzerland). It is not however necessary to detail the process: eventually by 01.56 on the morning of 13 October Mr Holyoake had sent everything through, and at 02.14 Mr Gayle acknowledged that he now had the loan agreement signed by Mr Holyoake and the two declarations signed by all parties and witnessed. At 02.25 Mr Williams confirmed that the funds could be released, and the contract of sale of GGH to Hotblack was duly completed during the day of 13 October. The receivers did not in the event insist on the full £43m, and the final purchase price was some £42.85m.

As finally executed the Loan Agreement contained the following provisions, so far as relevant:

The two declarations of trust were made by deed. One was made by Hotblack as Trustee in favour of CPC as Beneficiary (“the Hotblack Declaration of Trust”) and its substantive provision was as follows:

“NOW IT IS HEREBY AGREED AND DECLARED that the Trustee holds the

Property in trust for the Beneficiary as to 30% of the equity in the Property and in

the event of the Property being sold the Trustee shall pay to the Beneficiary the sum of £10,000,000 out of the proceeds of sale after all sale expenses directly referable to the sale but if that does not produce £10,000,000 Mr Holyoake shall personally make up the difference but for the avoidance of doubt the Beneficiary shall not be responsible for any loss whatever.”

The Property was not specifically defined but it is clear from the recital that it was the freehold of GGH. Mr Holyoake was a party to this deed (because of his obligation to make up the difference), and executed it both for himself and for Hotblack which was said to be “acting by a director”. In fact Mr Holyoake was not a director of Hotblack, the only directors then being Mr Andrew Crichton and Ms Helen Crichton, both of Caversham. Mr Holyoake seems to have thought that as the ultimate beneficial owner he could execute the deed for Hotblack.

The other declaration of trust was by Mr Holyoake as Trustee in favour of CPC as Beneficiary (“the Holyoake Declaration of Trust”) and its substantive provisions were as follows:

“The Trustee is the Beneficial owner of the entire issued share capital of Greenland

Limited a private company incorporated according to the laws of the British Virgin Islands, which company in turn owns the entire issued share capital of HOTBLACK HOLDINGS LIMITED (the Shareholding).

NOW THE TRUSTEE HEREBY DECLARES that he holds 30% of the

Shareholding for the benefit of the Beneficiary pursuant to the terms of the loan agreement. In the event that the Shareholding is sold (as distinct from the Property) the Trustee shall pay 30% of the net profits to the Beneficiary but if 30% of such net profits do not produce the sum of £10,000,000 (provided that for the avoidance of doubt the Beneficiary shall be under no liability whatsoever for any loss) the Trustee shall make up the difference forthwith.”

The two Declarations of Trust suffer from some fairly obvious deficiencies of drafting, some of which were later corrected by Deeds of Amendment, but it is not necessary to refer to them here.

I can now consider the first of the two disputed factual issues. This is pleaded as follows: that in the early hours of 12 October, one of the directors of CPC, to the best of Mr Holyoake’s recollection Mr Williams, spoke to Mr Holyoake on the telephone, and represented (i) that CPC required a net asset statement from him, (ii) that CPC was starting a business lending to high net worth customers, that CPC would be seeking net asset statements from its customers, and that it would assist CPC to have a net asset statement from Mr Holyoake that they could refer to, and (iii) that the net asset value should be ten times the proposed amount of the loan; that Mr Holyoake replied that such a net asset value was grossly excessive and should be two or at most three times the loan; and that Mr Williams then represented (iv) that:

“Mr Holyoake’s net asset statement was being sought purely as a formality, and would never be relied on by CPC or used in the context of CPC’s loan to Mr Holyoake in view of his friendship with Nick Candy, and that the purpose of the net asset statement was merely to assist with its new loan business.”

This representation (iv) was said to be false, and to have been made fraudulently, Mr Williams knowing it to be false or having no belief in its truth.

In his witness statement for trial (his second statement dated 7 November 2016) Mr Holyoake gave an account largely in line with this pleading, but putting the call in the early hours of the morning on which the loan was signed (that is 13 October, not 12 October as pleaded), saying that the proposal for a net asset statement came in quite late in the day, in the early hours, and that, looking back, it was deliberately raised at the last minute in order to be used against him. This is impossible to reconcile with the e-mails, and an attempt by Mr Holyoake to suggest that all he had meant to convey was that it had not been raised at the outset is unconvincing because of the reference to it being deliberately raised at the last minute. Having studied the e-mails however Mr Holyoake gave a rather lengthier account in his fourth witness statement (dated 17 January 2017, shortly before the trial) which respected what they show; he now placed the call with Mr Williams somewhere between the telephone call at 21.10 and his e-mail of 22.23 at which he said he was happy to sign. In closing Mr Stewart placed the call slightly later, between Mr Gayle’s circulation of the final form of the loan agreement at 22.13 and Mr Holyoake’s e-mail of 22.54 asking if there were any further comments.

Mr Williams denied that any such call had taken place. The onus is on Mr Holyoake to establish this allegation, and although the standard of proof is the balance of probabilities, it is well established that the more serious an allegation is, the more cogent the evidence needs to be to discharge the onus: see In re H (Minors) [1996] AC 563. I have come to the clear conclusion that I cannot find this allegation proved on the evidence before me. This is for the following reasons:

There was one other source of evidence which emerged late in the day. Mr Lord suggested to Mr Holyoake in cross-examination that he had made up certain allegations (including this allegation of fraudulent misrepresentation), and in reexamination Mr Stewart waived privilege in a number of e-mails from Mr Holyoake to his then solicitors, Collyer Bristow, in an attempt to rebut the allegation of recent fabrication. There is one on 29 March 2012, and then a series of 5 (numbered 1 to 5) on 15 and 16 April 2012; there is also an exchange with Collyer Bristow on 13 February 2012 concerning a file note they made, which is referred to in the e-mail of 29 March 2012 and privilege in which I held to have been waived as it was incorporated, as it were, by reference. These documents are therefore much closer in time to the events in question; and since they were written to his own solicitors to give them his account, there was no reason for him not to mention something if it had happened. As such, they seem to me to be of considerable evidential value. There are

In e-mail no. 4 of 16 April 2012, under the heading “Breach”, Mr Holyoake wrote:

“CPC … were claiming without merit an asset value default…I was furious a[t] this as the 120m figure was supposed to be a figure of wealth not a figure to be challenged I had raised this during the completion process and been told not to worry now I was being held to ransom.”

This is obviously a bit closer to Mr Holyoake’s present allegation, but is still some way short of it. Being told not to worry about giving a net asset covenant is not the same as being told that it was only being sought for use in connection with a lending business and an assurance that it would not be relied on. It should also be read with the third passage, later in the same e-mail, where, in answer to the question “Explain the issues surrounding the net asset valuation. Why did CPC want a NAV of £120m when the loan was only for £12m?”, Mr Holyoake wrote:

“This is explained previously it was suggested as being just a figure for the agreement rather than anything meaningful – Chris Candy stated on Oct 12th that it was nothing I should worry about the fact I had 10 x loan value was a positive and as such let’s use that – I would more normally have said No and used a more standard 1x or 2 x cover but at this point we were friends and so I mistakenly agreed to it.”

Here the statement (by Mr Candy not by Mr Williams) that the net asset statement was nothing he should worry about cannot be taken as any form of agreement not to rely on it, but as merely referring to the fact that if, as he said, he was worth that

Overall it can be seen that there is no support in these e-mails for the detailed and specific allegation that Mr Holyoake now puts forward. Reading the three passages together suggests instead that Mr Christian Candy said (no doubt in the 14.15 telephone call) that he was not overly concerned about the figure but some figure had to be put in (which would at that stage have been for the Minimum Net Asset covenant, not for the net asset statement), and that Mr Holyoake later agreed to use that for the net asset statement; but not that there was any specific assurance from Mr Williams later in the evening.

In all the circumstances, as I have already said, I find that this allegation has not been established: I am not persuaded that there was any late evening telephone call between Mr Williams and Mr Holyoake about the net asset statement at all; and even if there was, I find that nothing was said that would amount to an assurance by Mr Williams that the net asset statement was a formality and would never be relied on or used.

This misrepresentation is the only basis on which Mr Stewart submitted that the Loan Agreement was not legally binding on Mr Holyoake. It follows from my findings that the Loan Agreement was binding on Mr Holyoake in accordance with its terms.

The other disputed factual issue on the events of 12 October is whether Mr Holyoake made it clear that he did not want the CPC loan disclosed to Investec. It is more convenient to deal with this below.

Immediately after completion, the parties were enthusiastic about working with each other. At 2.04 on 13 October Mr Holyoake e-mailed the Candy brothers saying it was a good transaction for them all, to which Mr Christian Candy replied that as CPC had a profit share their combined interests were aligned and he would like CPC and C&C to be more than a passive party – they could bring a lot to the party including improved financing and planning and development skills; Mr Holyoake replied he was open to all this, to which Mr Nicholas Candy added that he was 100% agreed; they were now a team with all interests aligned and would be formidable together. A meeting was arranged for 20 October between Mr Nicholas Candy and Mr Holyoake; and Mr Tim Simpson, the Group Planning Director, put together a crib sheet for Mr Candy which set out the ways in which CPC and (separately) C&C could add value to the project, and a suggested professional team. I see no reason to doubt that these were genuine attempts to assist. Thus although there was nothing in the shape of a formal joint venture between them, the parties were preparing to work together for their mutual benefit.

At the same time however Mr Christian Candy was from the outset very alive to CPC’s contractual rights. On the morning of 13 October he had requested Mr David to give him the key dates; later that day when Wragges sent CPC a bill for the work they had done, he agreed with Mr David that Mr Holyoake should pay it (and pointed

In fact none of the three deliverables turned out to be straightforward. The second deliverable was the Saunders Bearman letter required under cl 10.1(e)(2) of the Loan Agreement. Such a letter was sent by Mr Wells to Mr Williams on the morning of 20 October, but CPC and Wragges wanted it redrafted, and it went through a number of versions before being finally accepted on 16 November, Mr Holyoake having by then also executed Deeds of Amendment to each Declaration of Trust as drafted by Wragges. The letter did not confirm that the requisite Authorisations (including from Investec) had been obtained; instead it confirmed (as permitted by cl 10.1(e)(2)) that the Declarations of Trust were not in breach of, or in conflict with, and did not constitute a default or termination event under, any agreement or instrument binding on Mr Holyoake, Hotblack or Greenlander. It is very doubtful if Saunders Bearman should have given such a confirmation, but I do not propose to go into this issue here: Mr Holyoake’s obligation was to deliver a letter from Saunders Bearman in acceptable form, which he did.

The third deliverable was the Jersey law opinion. An opinion from Jersey lawyers called Viberts was sent in draft on 21 October, but again Wragges wanted it redrafted and it took some time before Viberts were willing to sign off on the revised version, not least because Mr Russell Homer, the legal counsel of Caversham, was initially unhappy that Mr Holyoake had executed the Hotblack Declaration of Trust when he was not a director of Hotblack. But a board meeting was held at which the Declaration was ratified and Viberts ultimately signed off an opinion in acceptable form on 23 November.

The other deliverable was the first, namely the net asset statement, and this proved more controversial. Mr Wells handled the preparation of this for Mr Holyoake. He had in fact recently prepared a net asset statement for Mr Holyoake for the purpose of applying to a Spanish bank, La Caixa, for a re-mortgage of the Ibiza property. This was signed off by Mr Holyoake’s personal and tax accountant, Mr Colin Burns of Gerard Edelman, on 20 September, but not in fact forwarded by Mr Wells to La Caixa until 14 October. It gave an overall value for Mr Holyoake’s net assets of about £82.5m and income of another £6m odd.

On 14 October Mr Wells e-mailed Mr Holyoake, saying that they were “currently at 90m with property and income – we need to get to 120m”, and Mr Wells and Mr Holyoake then considered how to do this. That led to an e-mail from Mr Wells to Mr Burns on 18 October attaching a draft net asset statement; Mr Burns approved it and

The net asset statement as sent (“the October net asset statement”) gave net assets of just over £120m at £120,111,333. It was sent with a letter from Mr Burns which said that they (Gerard Edelman) had been asked to provide a statement of his net assets and liabilities which they enclosed, and the information was given in good faith but “on our normal terms, such that no liability attaches to ourselves.” A comparison with the La Caixa net asset statement reveals a number of differences, the most significant of which were that the value of Mr Holyoake’s holding in ISI, which in the La Caixa statement had been given as £28.8m (60% of £48m), was given in the CPC statement as £49.2m (60% of £82m); and that the value of Mr Holyoake’s interest in GGH, given in the La Caixa statement as £15.3m (calculated as 85% of equity of £18m, based on a gross value of £42m and debt of £24m), was given in the CPC statement as £23.703m (100% of equity, based on a gross value of £45.503m and debt of only £21.8m). Neither the Oscarone loan of £7.5m nor the loan which Mr Holyoake had taken from CPC of £12m was shown as a liability. The net asset statement also included a round £5m cash which had not been shown on the La Caixa statement.

Mr Williams replied on 21 October with a number of comments. He said that the letter from Gerard Edelman was insufficient as it excluded liability, the intent being that CPC could rely on their certification if need be. He also adjusted the statement because it did not include the fact that 30% of Mr Holyoake’s interest in GGH was held for CPC, or the £12m CPC loan. These two adjustments reduced the net position to c £101m.

That led to a protracted dialogue. Mr Wells (and Mr Holyoake who got involved) disputed that the word “certify” meant that Gerard Edelman had to assume personal liability, saying that it would be unrealistic to expect this to be done in 5 days, and challenging Mr Williams to produce an example of a net asset statement certified in such terms. (As already noted, one thing that noticeably does not appear in their e-mails was any contention that Mr Williams had assured Mr Holyoake that the net asset statement was a formality and would not be relied on). Mr Williams for his part reiterated that the key point was that CPC wanted to rely on a third party professional, and so their PI cover, because the loan was arranged without there being time for any due diligence. On 8 November Mr Wells sent Mr Burns a package of material (valuations and the like) and asked him to provide more colour around the statement, and on 10 November Mr Burns duly signed off a second letter enclosing an amended net asset statement. The letter (drafted by Mr Wells and Mr Holyoake) contained considerably more detail seeking to justify the figures, but again said that while the information was given in good faith, it was given “on our normal terms such as that no liability attaches to ourselves.” The net asset statement enclosed (“the November net asset statement”) showed some downwards adjustments to the values of certain properties (the residential part of 46-48 Grosvenor Gardens and the development property at 2 Westbourne Mews, but not GGH which was left at the same value), offset by an upwards adjustment to the value of Mr Holyoake’s holding in ISI to

Neither this nor supporting information which Mr Wells provided satisfied Mr

Two issues were canvassed at the trial on this: whether the requirement for the net asset statement to be certified required Gerard Edelman not only to confirm the net asset statement, but to accept personal liability for it; and whether the net asset statements were accurate statements of Mr Holyoake’s net worth. The latter was investigated at some length but in the course of cross-examination Mr Holyoake accepted that various liabilities were omitted from the net asset statements (although he said that various assets were also omitted); and when asked what he was worth at the time that the net asset statements were put forward said he would be comfortable with the figure in the La Caixa statement, that is approximately £82m as a broadbrush figure. He qualified this somewhat by saying that he drew a distinction between what he actually felt he was worth if he had to choose a figure (about £82m), and what he could put forward as a figure that could be justified (the £120m) since the value of his interest in ISI in particular was one where there was a wide range of potential values. But in closing Mr Stewart expressly accepted that Mr Holyoake did not have net assets of £120m at the material times, and put forward as the Claimants’ case the contention that he had a net worth in the range of £60m to £100m as at 12 October 2011 and at all material times thereafter, and that this was best reflected by the La Caixa net asset statement, that is of the order of £80-£85m.

The Defendants contend that Mr Holyoake’s actual net worth was very much lower than this, indeed that he was a man of straw, and expert evidence was called both as to the value of various property assets and as to the value of Mr Holyoake’s holding in ISI. But in the light of Mr Stewart’s position it does not seem to me that I need to reach any final conclusions on this, and it is sufficient to say that whatever Mr Holyoake’s true net worth, it was some way short of £120m. Since I have rejected his case that the Loan Agreement was induced by a fraudulent misrepresentation, the consequence is, as Mr Stewart expressly accepted, that Mr Holyoake was in breach of the terms of the Loan Agreement.

I will however refer to some of the features of the net asset statements put forward in October and November 2011:

It is also not necessary to consider the true value of Mr Holyoake’s interest in ISI. This was addressed at length by the expert witnesses, and their evidence revealed a very stark difference of view, Mr Ballamy (the Claimants’ expert) valuing ISI in October and November 2011 at between £34.6m and £47.8m and Mr Ellison (the Defendants’ expert) at £5m, but however interesting it would be to consider and resolve the differences between them, I do not see that any useful purpose would be served by doing so.

Two points can however be made briefly about the value placed on Mr Holyoake’s interest in ISI in the net asset statements which do not turn on any expert evidence. First it is apparent from both the October and November net asset statements that Mr Holyoake’s interest in ISI was calculated at exactly 60% of the value of the whole (£49.2m, being 60% of £82m (Oct); £51,697,835, being 60% of £86,163,058 (Nov)). In fact Mr Holyoake did not own 60% of ISI. The evidence is that he owned (or rather had agreed to buy – he confirmed to his father in February 2012 that he did not have the equity and that it was in escrow pending the final payment due, and he did not make the final payment until after GGH was sold in 2014), a 55% interest in ISH. Indeed when Mr Wells was putting together a presentation for him in July 2011, Mr Wells had initially referred to Mr Holyoake as having a 55% interest. Mr Holyoake had however told him to use 60% “as that’s what companies house says” and thereafter Mr Wells used the figure of 60% for the presentation, and later for the net asset statements. Mr Holyoake accepted that by July 2011 his (beneficial) shareholding was only in fact 55% (confirmed by the Overarching Agreement, which said that 5% of the shares held by his company Oakvest Holdings were held on trust for someone else); but he gave an explanation that because he had disposed of 5% of the equity in return for income, there was a dilemma as to how to value that. I did not understand this: on the face of it, Mr Holyoake’s assets only amounted to 55% of ISI.

Second, the value of ISI was derived by taking a multiple of its forecast profits (that is earnings before interest, tax and depreciation or EBITDA). For the October net asset statement it appears that the multiple used was 8.3 and the forecast EBITDA £9.96m. For the November net asset statement, as the property values had been reduced, Mr Holyoake asked Mr Wells to boost the ISI figures slightly by increasing the forecast EBITDA to get over the £120m, which Mr Wells did. On 14 November however, after the November net asset statement had been sent, Mr Wells sent an e-mail to Mr Holyoake in which he said:

“we have 2012 forecast at 10.2m and just realised they in euros and we have done it in £ so would need to make forecast at 11.5m. He has not asked for forecast so I can change up if we get to that…”

I find therefore that Mr Holyoake did not have net assets of £120m at the time of the Loan Agreement, or at the time the net asset statements were given in October and November. I also find that the net asset statements were not acceptable to CPC, in that, among other things, they did not show liability for CPC’s loan and they included the value of 100% of the equity in GGH without allowing for CPC’s 30% interest. In those circumstances Mr Holyoake was in breach of the Loan Agreement, both in not delivering a net asset statement that was in substance acceptable to CPC, and in not maintaining the Minimum Net Asset cover, and CPC was therefore justified in asserting, as it did, that there had been an Event of Default.

That makes it strictly unnecessary to resolve whether Mr Holyoake was also in breach of the requirement that the net asset statement be “certified” by a firm of accountants on the ground that Gerard Edelman had excluded any personal liability. I will however briefly give my views. As a matter of normal language the requirement that a firm certify the net asset statement requires it to say something along the lines of: “We hereby certify that Mr Holyoake’s net assets are as shown on the attached statement”. I do not see in the wording of the contract any express requirement that the firm go further and also accept a personal liability to CPC. So in order for the requirement to exist it is necessary to imply a term to that effect. The tests for implication of contractual terms are well-known and strict, and in my judgment they are not satisfied here: to require that a firm of accountants not only certifies Mr Holyoake’s net wealth but puts its own liability and professional indemnity insurance on the line, is not, it seems to me, implicit in the express terms, or so obvious as to go without saying, nor do I see that it is needed for business efficacy or to make the contract work. One can well understand Mr Williams’ point that in the absence of due diligence before making the loan, CPC wanted to have a professional firm and its insurance cover to look to, but that does not mean that without this extra protection the clause is robbed of all utility. It should be some reassurance to a recipient of a net asset statement that a reputable professional firm is prepared to certify it even if it is not prepared to accept liability for it, as one would not expect a reputable firm to do that without having satisfied themselves that there was some basis for it, and whether a term should be implied into the contract or not cannot of course be affected by the fact that Mr Burns was in the event content to send out the net asset statements as he was asked to without any very detailed investigation. I therefore find that Mr Holyoake was not in breach of the net asset statement obligation in failing to provide one which Gerard Edelman was prepared to accept liability for.

Mr Wells in his evidence made much of the contention that the net asset statement provision in the Loan Agreement was a “Trojan horse” clause that was impossible to comply with, such that Mr Holyoake would inevitably be in breach and that he was being set up to fail. This was primarily based on the word “certifying” and Mr Williams’ contention that this required the certifier to accept a direct liability to CPC. I have already said that I do not accept this contention. I accept that it was perhaps unlikely that a firm of accountants – or a firm of lawyers or a bank – would agree to accept direct liability to CPC, and even more unlikely that they would be prepared to do so within 5 days. It is noticeable that when Mr Wells asked Mr Williams for an example of a certified net asset statement he did not provide one, and in fact he confirmed in evidence that he had never seen one, although he had seen a certified statement of affairs for a company. But I am not persuaded that this was something that was deliberately designed as a trap, nor do I accept, as Mr Stewart asked me to, that this construction was being advanced improperly in the knowledge that it was impossible for Mr Holyoake to comply. What the documents show is that it was agreed on the telephone call which Mr Holyoake joined after 16.58 that he provide a net asset statement signed by a reputable auditor/lawyer/bank, and Mr Gayle then circulated a third draft of the loan agreement at 19.51 which contained such a provision, including the word “certifying”. Mr Williams’ evidence was that it was he who wanted the net asset statement backed up by somebody else and he wanted that person to be a professional and for it to be certified, and that he did not think it would be difficult to get a professional sign-off from someone who knew his affairs intimately. I accept this evidence, which seems to be both consistent with the documents and inherently credible.

A second question is whether CPC expected Mr Holyoake to have difficulty complying with the net asset covenant at £120m. Mr Christian Candy’s evidence was that he thought at the time of the loan that Mr Holyoake was worth some £200m, that he knew he was an immensely wealthy man through British Seafoods and had taken a substantial hit after British Seafoods, and that the source of his information was his brother. Mr Nicholas Candy said he thought Mr Holyoake had told him that he was worth about that, but was very vague about it. Mr Williams too said he was under the impression that Mr Holyoake was worth £200m, but was unclear whether this was something Mr Holyoake had told them or not.

I am sceptical of this rather vague evidence, which is not supported by any contemporary documents. What can be demonstrated from the documents is that on 7 November 2011 Mr Christian Candy e-mailed both his brother and Mr Williams to pass on what Mr Pym had told him over the weekend when they were having a drink at a hotel in Paris, probably in the early evening of Saturday 5 November, Mr Candy having taken Mr Pym and various other guests to Paris for the weekend to celebrate his wife’s birthday. What Mr Candy said in his e-mail was that Mr Pym had told him that Mr Holyoake was worth £400m pre British Seafoods, and “is worth £200m now” and that he had put assets in trust in Hong Kong. That is not quite how Mr Pym reported the same conversation to Mr Holyoake the previous day, which was that he had said that “I had full oversight on your assets which were in excess of £250MM, of which the majority were held in Trust! He took it on board!”. (The reference to a

I think it likely that none of them really knew what he was worth or quite what his wealth consisted of: there is an e-mail of Mr Christian Candy to his brother of 20 October in which he says that Mr Holyoake was due to send them his net asset statement that day and adds “Will make an interesting read”, to which his brother replied “Very”. And despite Mr Pym’s belief that Mr Christian Candy had taken on board what he told him, by 7 November neither brother thought he was worth anything like £200m – Mr Nicholas Candy’s reaction to his brother’s account of what Mr Pym had said was that he did not think Mr Holyoake was worth £100m, to which Mr Christian Candy replied that he thought he was worth a maximum of £75m. That was said after they had seen his net asset statement at just over £120m, but there is no hint that they had very recently believed he was worth nearly twice that.

I do not therefore accept that Mr Christian Candy or CPC believed at the time of the loan that Mr Holyoake was worth £200m. However that does not mean that he or they expected or intended him to fail the £120m covenant. By the early afternoon of 12 October (UK time) Mr Candy had calculated the interest payable over 2 years at £5.28m, equivalent to an annual interest rate of 22%, and circulated the figures, saying to Mr Tim Dean of CPC, who was with him in LA, that he would talk him through this at breakfast. He later queried why Mr Holyoake was being given 6 months before CPC obtained security, and was told by Mr David that the 6 months was driven by Mr Holyoake taking a dividend out of one of his companies and that Mr Holyoake had suggested 6 months so as to resolve this. On 13 October, after completion of the loan, Mr Christian Candy sent his brother an e-mail to the effect that Mr Holyoake intended to repay the loan in full in February 2012, which would be a £5.28m profit, saying “If this happens it is an off the scale deal”. On 26 October, he circulated an internal e-mail passing on the information (which he had probably got from Mr Pym whom he had seen the previous evening) that Mr Holyoake thought he had paid over the odds for the loan, to which he added the comment “No shit Sherlock!!!”. I conclude from all this that Mr Candy at the time of the loan thought that the returns Mr Holyoake was offering, simply in terms of interest and even without taking into account the profit share, were very attractive, even if the interest was paid at the end of 2 years, and very much more so if the loan was repaid in full in the spring of 2012. That sufficiently explains why he was keen on CPC doing the loan, and it is not necessary to assume that he went into the loan intending Mr

What is true is that, as I have already said, Mr Christian Candy was very alive to

And on the morning of 18 November he had a telling e-mail exchange with Mr Williams. He asked Mr Williams if he now had everything he required. Mr Williams replied that he was waiting for the Jersey legal opinion which he was expecting that day. Mr Candy’s response was:

“Ok. Let me know once in. We can then apply pressure on the net asset statement, correct?”

Mr Candy said in evidence that what he meant by that was using pressure to obtain a compliant net asset statement, and that by pressure, he meant legal, contractual legitimate pressure. He denied that what he meant was seeking to use the net asset statement to assert that Mr Holyoake was in breach. But I think that was exactly what he was thinking of. He would get Mr Williams to press for a compliant net asset statement, but by this stage I think Mr Candy believed that Mr Holyoake would be unlikely to be able to show net assets of £120m, and thought he could then use that to his advantage. I have already referred to the fact that he did not believe Mr Pym’s assertion that he was worth £250m or £200m, and told his brother on 7 November that he thought Mr Holyoake was worth £75m at a maximum; on 10 November CPC had had Mr Holyoake’s second attempt at a compliant net asset statement (the November statement) which Mr Williams was still not happy with; then on 11 November there had been a telephone call to discuss it between Mr Williams, Mr Christian Candy, Mr Wells and Mr Holyoake in which Mr Wells and Mr Holyoake agreed to provide further information on Mr Holyoake’s properties and on ISI, a call that Mr Candy described in an e-mail sent to his brother that evening as “uncomfortable”. I infer that Mr Candy was not reassured and that by 18 November he was very doubtful if Mr Holyoake would be able to provide a net asset statement that he and Mr Williams would regard as compliant. When therefore he referred to applying pressure on the net asset statement, I consider he was not referring so much to getting a compliant net asset statement but to taking advantage of the fact that Mr Holyoake would be unable to comply, and that he was already contemplating calling default on the loan.

None of this however establishes, and I am not prepared to infer, that when the Loan Agreement was drafted and agreed Mr Candy was expecting Mr Holyoake to fail the net asset covenant provision and setting him up to fail. Rather what it illustrates is Mr Candy’s readiness to exploit the provisions of a contract. His own description of himself was that he was a “candid and tough” businessman; and his brother gave evidence that he was a “very firm” businessman, very candid, to the point, a bit too much so even for him, and that “if you sign a contract with my brother, he expects it to be obeyed”. The evidence I have heard suggests that that could perhaps be rephrased as that “if you sign a contract with Mr Christian Candy, you can expect him to be astute to take every advantage of its provisions”.

On 8 November, while the debate over the net asset statement was still ongoing, Mr Christian Candy told Mr Holyoake that he wanted to tell Investec about the CPC loan. Mr Holyoake’s reaction was that he had made it clear that he did not want Investec to be told. Mr Stewart placed great reliance on this episode and I should deal with it in detail. It played out in a series of e-mails over the course of 8 and 9 November as follows:

Mr Nicholas Candy did have a meeting on 10 November with Investec, having drinks with Mr Bernard Kantor and Mr David Currie. Mr Kantor was the co-founder of Investec and its CEO, described by Mr Currie as a major force in the organisation; Mr Currie was then and had been since 2003 the head of Investec’s Investment Banking Division. On 23 November Mr Nicholas Candy e-mailed Mr Holyoake, who was trying to set up a meeting, and said, in passing, that he had had drinks with the CEO of Investec 2 weeks before and thought Investec would allow a second charge on GGH: he had not mentioned Mr Holyoake or GGH, but was talking generically about Omni. Mr Currie confirmed that at the meeting there was a fairly general business discussion around the London property market and what opportunities might arise for

I am entirely satisfied that the e-mails from Mr Candy to Mr Holyoake on 8 November contained a series of deliberate lies. The true position was revealed by some late disclosure given during the cross-examination of Mr Christian Candy, and was as follows:

It seems clear from this material, and I find, that (i) although Mr Nicholas Candy was keen on the idea of acquiring the heliport in August 2011, CPC then decided against it; (ii) when Mr Currie raised the question of the heliport in October 2011, Mr Nicholas Candy was again interested but CPC was not; and (iii) when Mr Seaton sought to interest Mr Nicholas Candy again, Mr Christian Candy said that it was a waste of time. CPC therefore rejected any deal involving acquisition of the heliport on three occasions despite Mr Nicholas Candy’s interest in it. In particular, on the morning and afternoon of 8 November the position was that CPC had no plans to acquire the heliport, and had given no consideration to seeking finance from Investec, let alone what information Investec might require to progress such financing.

It was not suggested that CPC were looking at any other potential deal with Investec at the time. It was therefore flatly untrue, and known by Mr Christian Candy to be untrue, to say, as he did in his e-mail of 09.50 on 8 November, that CPC was “looking to acquire” a large asset which Investec was selling, that it was one that they were looking to “finance through Investec”, or that that meant that CPC had to disclose its net asset statement by 10 November. It was untrue, and known by Mr Christian Candy to be untrue, to say, as he did in his e-mail of 11.47, that CPC wanted to issue all financials to Investec as soon as possible “to progress the financing of the acquisition”. It was untrue, and known by Mr Christian Candy to be untrue, to say, as he did in his e-mail of 15.17, that CPC was looking to do a large acquisition with Investec that would involve “substantial equity, debt and mezz” or that that meant that CPC would need to “open its kimono to Investec, and detail its assets and liabilities.” It was untrue to suggest, as he did in the same e-mail, that Mr Williams had insisted on full disclosure to Investec, and that Mr Candy had decided not to overrule him.

Mr Holyoake was not deceived by the lies he was told. He was very clear in his evidence that he did not believe Mr Christian Candy when he said that CPC was doing business with Investec.

Mr Candy was asked about his e-mails. He was initially asked on Day 17 (2 March 2017) before the late disclosure about the heliport. He accepted that he knew that his brother’s suggestion at 08.30 that “we need to tell Investec this week” was a lie, and that his own e-mail at 09.50 that “we need to provide them our net asset statement before Thursday” was a lie and one that he made deliberately to put pressure on Mr Holyoake, but maintained persistently that the lie was simply that he shortened the period when the net asset statement would have to be provided from two weeks to two days. He refused to accept that there was anything wrong with the statements (at 07.22) that “Investec will want the CPC Group net asset statement…they will find out one way or another in the next couple of weeks” and (at 08.25) that “I can tell you now that we have to provide CPC’s net asset statement”, although he sought to justify them by saying repeatedly that Investec would have seen CPC’s balance sheet if CPC were to progress the transaction, if they were to proceed with the heliport, if the transaction was to proceed, if there were going to be further discussions regarding the heliport. He said however that there was indeed a transaction, that at the time he believed they would have to provide the net asset statement, and that he believed Investec would need to see the information in a couple of weeks.

Mr Stewart returned to the question on Day 19 (6 March) after the late disclosure (which was largely disclosed on 5 March). Mr Candy refused to accept that he had fabricated anything other than shortening the period from two weeks to two days; and reiterated that if CPC were looking to acquire the heliport, something which was under consideration, then they would have asked Investec for finance. In fact it was clear from Mr Currie’s evidence that although Investec might well have been willing to lend to CPC if CPC had wished to acquire the heliport, they were not in a position to match the rates which CPC could borrow at elsewhere, and it is highly unlikely that CPC would have financed the acquisition through Investec.

I was very unimpressed with Mr Candy’s evidence on this aspect of this case. There is a significant difference between what he was telling Mr Holyoake – namely that CPC were actually intending to do a substantial deal with Investec which would involve disclosing its assets and liabilities – and what he suggested in the witness box – that they were still considering it and would have sought finance from Investec if they had gone ahead; and an even greater difference between what he was telling Mr Holyoake and the reality, which was that on 8 November CPC had no plans to acquire the heliport, there was no question of seeking finance from Investec, and there was no imminent likelihood of having to disclose financial information to them. I am entirely satisfied that Mr Candy’s statements were a pretence designed to put pressure on Mr Holyoake. Mr Candy took advantage of the coincidence that Mr Currie had approached his brother about the heliport, and that there was a meeting between Investec and his brother fixed for 10 November, to put forward, and then embellish, this concocted story. He did so because he thought that Mr Holyoake was hiding something from him. He was right about that as Mr Holyoake was concealing the Oscarone loan from him, but this does not justify the series of lies. And when he came to give evidence, despite his protestation that if he had lied he would stand up and admit it, he was only in fact willing to admit to shortening the timescale, and tried to gloss over the wider pretence.

Mr Christian Candy is an intelligent man who pays close attention to detail and in his evidence showed an impressive knowledge of the disclosed documents, and I was left with the distinct impression that he had prepared for giving evidence by studying them with considerable care – that is no doubt why he felt constrained to admit to lying in shortening the time period from two weeks to two days – but that he was somewhat caught out by the late disclosure about the heliport which only came to light after he had gone into the witness box, and which he had therefore not had a chance to study beforehand; indeed on Day 20 he said in answer to one question that “most of this was news to me yesterday”.

Mr Nicholas Candy was also asked about these e-mails. He too refused to accept that his brother had lied in any respect other than shortening the time period from two weeks to two days. I found his evidence on this part of the case very weak. It was he who suggested at 08.30 that his brother tell Mr Holyoake they were working on a big deal with Investec, and I find this was untrue and known by him to be untrue. In oral evidence he attempted to justify it by reference to other matters he discussed with Mr Kantor (Omni, and Investec’s relationship with CPC and C&C generally); but leaving aside the fact that he had not had his meeting with Mr Kantor by 8 November, it was in any event only an exploratory meeting to discuss business generally (Mr Currie confirming that Investec had not to date done any business with the Candys) and the difficulty with this explanation is that Mr Nicholas Candy’s e-mail quite clearly refers to a specific transaction, not to the sort of business that Investec could do with the Candys generally. Mr Nicholas Candy also said in evidence that at the meeting with Mr Kantor they would have discussed the heliport briefly. That I can accept, and Mr Currie said in evidence that he would have taken the opportunity to mention the heliport in front of Mr Kantor, and Mr Nicholas Candy was still quite keen on the heliport – indeed he said in the witness box that he thought to this day that they had missed out on the deal. But that is not the same as CPC having decided to acquire it, and for reasons already given I am satisfied they had not. Yet Mr Nicholas Candy participated in a telephone discussion with his brother and Mr Williams the result of which was Mr Christian Candy’s e-mail of 09.50 in which the story was that Investec were “selling a large asset that CPC is looking to acquire and also finance through Investec”, which could only be a reference to the heliport; and it is very likely (and I find) that it was agreed on that telephone call to put this story forward even though it was not true.

For the reasons I have given, I have found it difficult to accept the evidence of either Mr Candy on this aspect of the case. Not only were both willing that Mr Holyoake be told a series of lies at the time, but neither was willing to admit to it in the witness box. That naturally undermines the extent to which I can have confidence in their evidence, and as a result I have approached the remainder of their evidence with some caution.

It can be seen that Mr Holyoake repeatedly referred in the e-mail exchanges to having made it clear to the Candys before taking the loan that he wanted the loan kept confidential from Investec: see his e-mails of 07.13, 08.21, 08.49, and 12.56 and again the next day at 10.26. Both Messrs Candy denied it, and Mr Christian Candy made the point that he would have been very suspicious if Mr Holyoake had told him he

Nevertheless it is striking that despite Mr Holyoake’s repeated reference back to what he had said at the outset, there was no attempt in any of Mr Christian Candy’s replies to challenge him on it. And the content of his very first e-mail (at 06.01) suggests that Mr Holyoake had indeed told him that Investec did not know about the CPC loan and thought he was doing the equity himself, as Mr Candy could only have got that information from Mr Holyoake.

I conclude that it is probable that when Mr Holyoake approached the Candy brothers for a loan, he did explain that he was buying GGH with a loan from Investec of £24m and did tell them that Investec did not know of this approach and thought he was doing the equity himself. That accords with what Mr Holyoake said in his first response at 07.13 (that he was “very clear prior to taking the loan that Investec were NOT aware”), and in his e-mail of 08.49 (“as we discussed prior to the loan I had not informed them”). It follows, and I also find, that Mr Candy knew when he sent his e-mail of 06.01 that Mr Holyoake had not told Investec about the CPC loan, and that he was being somewhat disingenuous in asking it as a question (“Am I correct in saying…?”). He suggested in evidence that it was the fact that Mr Holyoake had not put the £12m loan on his net asset statement for CPC that had made him think he had not told Investec about the £12m loan either, as he was aware that Mr Holyoake had also provided a net asset statement to Investec. That was an unconvincing explanation, firstly because Mr Holyoake would be likely to have provided his net asset statement to Investec some time before he had approached the Candys for a loan, and secondly because leaving the £12m loan off the net asset statement provided to CPC could not be said to be a concealment of anything (as CPC of course knew about the loan) and the inference that he had concealed it from Investec does not follow. I do not accept this explanation, or Mr Candy’s evidence that this was the genesis of his e-mail and that he was genuinely unsure whether Mr Holyoake had or had not told Investec. I find that he knew that Mr Holyoake had not.

I am in left in considerably more doubt whether Mr Holyoake specifically asked the Candys not to tell Investec. Mr Holyoake undoubtedly had very good reason to want to keep the CPC loan a private matter between himself and the Candys. First, there was a serious and obvious risk that if CPC talked to Investec, they would discover the existence of the Oscarone loan; Investec knew all about the Oscarone loan, and indeed had entered into a lengthy Intercreditor Deed with Oscarone containing detailed provisions regulating priorities between them. That is no doubt what Mr Holyoake was referring to by “ran/yaser issues” in his e-mail of 08.13 to Mr Pym.

Second, just as Mr Holyoake had led CPC to believe that they were in effect the mezzanine piece in his deal (and he was providing the rest of the equity himself), he had also led Investec to believe that the only lenders were Investec and Oscarone, and

So Mr Holyoake had powerful motives for wanting CPC to keep the loan confidential. But he did ask for the terms of the loan to be confidential (in his e-mail of 12 October at 20.07), and a confidentiality clause was negotiated in some detail and agreed, and the Loan Agreement as executed was marked “Private & Confidential” on its title page. That was sufficient for his purposes: he did not need to go on and get CPC to agree specifically not to tell Investec. There is some force in Mr Candy’s point that if Mr Holyoake had specifically said he did not want CPC disclosing the loan to Investec, it would have been a red flag to him. Mr Williams said much the same. In all the circumstances I am not persuaded that Mr Holyoake did say this; what I find he said, and secured agreement to, was that the Loan Agreement should be private and confidential to the parties, subject to the terms of the confidentiality clause.

It was submitted by Mr Lord that CPC were nevertheless entitled to disclose the loan to Investec. I do not think this is right. The prima facie position was that the Loan Agreement was private and confidential as shown by the marking on the title page. Mr Lord said that the loan cannot have been intended to be confidential from Investec, as it was entirely standard for lenders in the same capital stack to talk to each other; but I do not think that can displace the agreement that the Loan Agreement be private and confidential. Mr Lord referred to cl 10.1(e)(2) under which Saunders Bearman were to confirm that all requisite Authorisations, including from Investec, had been obtained to enable the Declarations of Trust to be granted; but this clause permitted Saunders Bearman in the alternative to confirm that the Declarations of Trust would not be in conflict with any existing agreements (which is what Saunders Bearman did) so this clause did not make it inevitable that Investec would be approached for their consent. Mr Lord also referred to cl 10.1(c) under which CPC would be entitled to security if Mr Holyoake had not repaid the loan by 12 March

I am not therefore persuaded that the terms of the Loan meant that CPC was under no obligation to keep the loan confidential from Investec. I see no reason why the prima facie confidentiality arising from the marking on the title page should not apply. That could only be displaced if the circumstances could be brought within the terms of the confidentiality clause, which was clause 20. Cl 20(a) permitted CPC to disclose a copy of the Loan Agreement to any person with whom it was proposing to enter into a transfer, participation or other agreement in relation to the Loan Agreement, but at this stage CPC was not proposing to enter into any such arrangement. It was not suggested that any of the exceptions in cl 20(b) applied.

It follows, and I find, that Mr Candy was threatening to reveal the existence of the CPC Loan Agreement (and some of its terms) to Investec in breach of an obligation of confidence binding on CPC. But that threat was not carried out, and shortly afterwards Mr Nicholas Candy told Mr Holyoake he had not spoken to Investec about the loan at all.

Mr Holyoake and Mr Christian Candy had arranged to have dinner together at Le Petit Bistro, a restaurant in Guernsey, on 1 December. Despite the two letters sent by CPC on 29 November, Mr Holyoake flew out to Guernsey and they did have dinner. It was a cordial occasion – in fact the first time the two men had met since the Loan Agreement. There is no record of the discussion as such but it is apparent that they discussed a proposal for early repayment of the loan in its entirety, with Mr Candy being prepared to accept £5m as an exit fee (in addition to principal and interest) in satisfaction of CPC’s right to a profit share, and that Mr Candy agreed that CPC would not for the time being proceed with the process of formal valuations and charges although it reserved all its rights. Mr Williams calculated the precise figure for Mr Candy on 5 December at £22,743,578, and on 9 December Mr Holyoake sent a message to Mr Candy to say he was comfortable with the quantum, followed by an e-mail on 13 December agreeing to pay the £22.74m before the end of January. Mr Candy replied on 14 December accepting the £22.74m figure so long as repayment was received by the end of January.

On 15 December however Mr Williams circulated to Mr Christian Candy and his brother and others in CPC an e-mail with information as to what he had discovered about Mr Holyoake’s properties. The development property at Westbourne Grove Mews was held through Hazelend LLP, and a search at the Land Registry or Companies House had revealed the registration of a charge in favour of 3i, which prevented the creation of any further charges without 3i’s consent; 3i also had a charge over another of Mr Holyoake’s properties at 47 Earls Court Road. Mr Williams pointed out that there was no reference to any liability to 3i in Mr

On 19 December there was a telephone call between Mr Christian Candy, Mr Williams and Mr Holyoake. Mr Holyoake promised to repay £12m by 13 January and the remaining £10.74m by 20 January. He also said he would have the charges in favour of 3i removed. Almost immediately after the call Mr Williams discovered that there was also a charge registered in favour of 3i against 38 Grosvenor Gardens Mews South, a mews house which was the most valuable of the mews properties, and e-mailed Mr Holyoake about it; Mr Holyoake replied that this would be removed as well. Mr Williams’ evidence (which was not challenged, and which I accept) was that Mr Holyoake had claimed in the telephone call that the charges were old and defunct, and that the debt to 3i had been discharged. That was another lie by Mr Holyoake: the true position was that there was some £10m still outstanding to 3i under the Overarching Agreement. Indeed Mr Holyoake had missed a payment due on 8

During January 2012 Mr Holyoake repeatedly said that he would repay CPC, although the date slipped from the original dates of 13 and 20 January to a single payment on 27 January, and then the end of the month; he gave every impression that everything was on track, negotiating and agreeing the drafting of the documents to be signed, and giving details of the transfers that would take place. Mr Christian Candy told his colleagues that he was confident Mr Holyoake would repay, and Mr Nicholas Candy also thought he would repay. Others in CPC were more doubtful – indeed Mr Smith had been very sceptical about the loan from the outset, and Mr Christian Candy bet him £10,000 that Mr Holyoake would repay £17m by the end of March at the latest. Mr Holyoake however, as he accepted in oral evidence, had no intention of paying £22.74m by the end of January; he thought that Mr Candy was greedy and that for CPC to almost double their money in three months was farcical. He decided to play along with it in order to buy himself time, his strategy being to offer them something between £12m and £15m (in the event £13.5m, which he regarded as giving them a generous return, £1.5m in 3 months on a loan of £12m being the equivalent of a 40% return per annum) and then negotiate anything else. He was reluctant in oral evidence to accept that he was deceiving CPC, preferring to describe it as playing them at their own game, but he did accept that he was telling them that he would repay £22.74m by the end of January when the reality was that it was not going to happen. In plain language he was stringing them along.

By 31 January no repayment had been made, and Mr Holyoake pushed the date back again, this time for another 48 hours. That afternoon however Mr Williams circulated an e-mail explaining that he had discovered that two new charges, dated 11 January 2012, had been placed on Mr Holyoake’s properties, one by Wellgold LLP on the mews house at 38 Grosvenor Gardens Mews South, and the other by Hazelend LLP on the Westbourne Grove Mews property, each in favour of Aeriance UK Loan Oy

None of this had of course been mentioned to CPC by Mr Holyoake. Both Mr Christian Candy and Mr Nicholas Candy described the discovery as a “watershed” moment, and their immediate reactions bear this out, Mr Nicholas Candy e-mailing “It needs to get tough from today. He can’t put second charges on things. I am not happy with this…” and again “This is not good”; and his brother replying “He is a fucking liar”. Mr Christian Candy’s evidence was that until then he had, despite some concerns, believed that Mr Holyoake had been about to repay the loan, but this shattered his remaining belief in Mr Holyoake’s good faith: he had strung him and CPC along with the promise of repayment while using the time to grant charges over the properties, thereby undermining Mr Candy’s “Plan B”, which was to seek security on them if Mr Holyoake did not repay. This evidence is inherently credible and I accept it.

Mr Holyoake’s pleaded case is that during January 2012 a number of telephone conversations took place between him and Mr Christian Candy, and a number of e-mails exchanged, in which Mr Candy made repeated, insistent and aggressive demands that Mr Holyoake repay the loan by the end of January, and that in a telephone conversation on 23 January 2012 Mr Candy, using a highly aggressive and threatening tone, told Mr Holyoake that unless he repaid the loan by the end of January, he would do everything he could to obtain GGH. I do not find these allegations proved. The e-mails in January show Mr Candy repeatedly asking Mr Holyoake to confirm that he would repay the loan by the end of January, but since this was what Mr Holyoake was himself promising, I do not think it is right to characterise them as insistent and aggressive demands. They also show that Mr Candy made it clear, for example in an e-mail of 11 January and again in e-mails on the morning of 31 January, that if repayment were not made CPC would be seeking to put charges on

As to the telephone conversation on 23 January, there is no trace in the documentary record of a telephone call on that day, let alone an aggressive and threatening one. More significantly, the privileged documents disclosed by Mr Holyoake give no support to any aggressive threats having taken place before 31 January. In his e-mail to Collyer Bristow of 29 March 2012 he referred to Mr Candy having made very aggressive and hostile threats on a daily basis “since end of Jan 2012” and listed certain telephone calls when threats were made, the earliest of which was on the evening of 31 January; in his e-mail no. 4 of 16 April he said:

“As soon as Jan 31st came and went CPC and Christian Candy changed irreversibly he [now] was completely focused on claiming a default and started to become extremely abusive and threatening. He claimed I was a liar and that he would ruin me.”

And in response to the question “When did CC become more threatening” he said:

“CC became more threatening after Jan 31st – he called me regularly and was deeply unpleasant – I felt he was blackmailing me and threatening me v directly – it was extremely uncomfortable.”

However I accept that there was a rather different telephone call on the evening of 31 January. Mr Williams’ e-mail revealing the existence of the Aeriance charges had been circulated at 16.32, and a conference call with Mr Holyoake, Mr Christian Candy and Mr Williams was set up for 18.30. It took less than half an hour as it was over by 18.54. Mr Holyoake’s description of it to Mr Pym later that evening was “A disaster…Chris was unbelievable” and “As bad as it gets. I have never heard anyone speak that way”, and to Mr Candy the next day was “a v difficult conversation last night”. Mr Candy’s own evidence in cross-examination was that it was a “tough phone call”, that he was “very, very angry…royally upset…really annoyed”, that he would have used “candid, blunt, colourful language”, and that he would have made it clear that Mr Holyoake’s behaviour was unacceptable. He denied however shouting and screaming at Mr Holyoake or losing his temper, saying that he prided himself on being measured, focused and clear.

I do not think it ultimately matters whether Mr Candy was shouting and screaming or measured and focused. By his own account he was very blunt with Mr Holyoake, telling him, no doubt in no uncertain terms and with a great deal of swearing, that he had categorically lied to them; that he had breached the loan agreement; that his net assets were not certified and below £120m; that the 3i charges pop up in December

It was suggested to Mr Candy (and was Mr Holyoake’s evidence) that he told Mr Holyoake that he would do anything he could to take GGH from him, but he denied it, saying that he wanted repayment not the asset. I accept Mr Candy’s evidence on this. Mr Candy explained, and I accept, that having been confident that Mr Holyoake would repay at the end of January, he was now seriously worried about not being repaid at all and losing the entire £12m. What he wanted was a route to repayment, not the asset.

The upshot of the call was that Mr Holyoake was given 48 hours to repay, although CPC could send a formal letter to him after 24. There is evidently a threat implicit in that, if not explicit, that if he did not repay in 48 hours, steps would be taken.

The steps that were threatened can be seen from a formal letter before action sent by Wragges on 2 February to Mr Holyoake, headed “Letter of Claim”. It referred to the breaches of the Loan Agreement in not maintaining the Minimum Net Asset cover level of £120m and in granting the Aeriance charges in breach of the negative pledge provision, and demanded immediate payment of the £17.74m as being due and payable under cl 11 (the event of default clause), with costs (to be quantified). If payment was not made by 4pm on 6 February, CPC reserved the right to take enforcement action including issuing proceedings for a money judgment, petitioning for Mr Holyoake’s bankruptcy, seeking to enter a restriction on GGH at the Land Registry to protect CPC’s interest under the Hotblack Declaration of Trust, and seeking a transfer and then sale of the shares held in trust under the Holyoake Declaration of Trust.

There are two other noticeable features of the letter. First, after referring to the two Declarations of Trust, the letter said that the sums demanded were not in satisfaction or reduction of CPC’s interests under the two Declarations and added:

“Those interests being worth the aggregate sum of £20,000,000. In the event that there is a shortfall after those interests are realised our client will look to you personally for such shortfall.”

Second, at the end the letter said this:

“If our client elects to make you bankrupt then it may also begin that process by advertising that a statutory demand has been made upon you as a precursor to the issue of a bankruptcy petition in local and national newspapers. It may also advertise in those same newspapers the fact that you have been made bankrupt when the Court eventually grants that order.” (emphasis in original).

Mr Stewart submitted that both of these passages were improper. As to the first, the Declarations of Trust are admittedly not well thought out or drafted because it makes no sense for CPC to be entitled to a beneficial interest in 30% of “the Property” (that is the freehold of GGH, implicitly in the original Declaration and expressly by the Deed of Amendment) and in addition 30% of the shareholding in Hotblack (which if taken literally would mean CPC would be entitled to 30% of GGH and 30% of the value of Hotblack’s remaining 70% of GGH). It is tolerably clear however from reading the two together that the intention was that CPC should receive its share (30% of the net profits with a minimum of £10m) either under the Hotblack Declaration of Trust if there were a sale of GGH, or under the Holyoake Declaration of Trust if the shares in Hotblack (as distinct from GGH) were sold, but not both; or in other words that the two Declarations of Trust were intended to provide money for CPC in the alternative not cumulatively. And if there were any doubt about that, the e-mails of 12 October make it clear that CPC was intended to have one minimum sum of £10m not two, and if necessary the Declarations of Trust could doubtless have been rectified accordingly. So I accept that the claim to a minimum of £20m was not well-founded and would never have succeeded.

Mr Candy was asked about this. He accepted that the claim for £20m was a mistake and it should have been £10m, although he suggested that he did not know that at the time, and said that Wragges had advised that on one interpretation the minimum sum payable could have been £20m. Mr Williams was also asked about it. He accepted that his personal understanding of the deal was that CPC would be entitled to a minimum not of £20m but £10m, but said they were advised that the declarations of trust worked that way, and if you are making a claim you put your best foot forward and if there is a legal construct that says “Actually that is 20 not 10” you go “Great”. I find on this material that both Mr Candy and Mr Williams knew at the time that what had been agreed on 12 October with Mr Holyoake was a minimum of £10m (I do not think Mr Candy would have forgotten this), but that Wragges advised that a legally tenable argument could be put forward that the minimum sum was £20m, and they were happy for such an argument to be advanced. That might be thought a bit sharp – opportunistic was Mr Stewart’s word – but however commercially questionable, I doubt if advancing a claim that you have been advised is legally sustainable is by itself an unlawful thing to do. In any event there was no question of the minimum sum, be it £10m or £20m, being then payable, and Wragges were not demanding payment of the £20m but reserving CPC’s rights to it; Mr Holyoake was advised to seek (and did seek) legal advice; and Mr Holyoake made no mention in his witness statement of this assertion being something that concerned him. The contention does not appear to have been raised again, and I do not think it had any significant impact at all.

As to the second point, a statutory demand is not something that is routinely advertised. Under the Insolvency Rules 1986, which were then in force, there was provision in rule 6.3(3) for a creditor to advertise a statutory demand in certain limited circumstances as follows:

“Where the statutory demand is for payment of a sum due under a judgment or order of any court, and the creditor knows, or believes with reasonable cause –

(a)

that the debtor has absconded or is keeping out of the way with a view to avoiding service, and

(b)

there is no real prospect of the sum due being recovered by execution or other process

the creditor may advertise the demand in such manner as the creditor thinks fit; and the time limited for compliance with the demand runs from the date of the advertisement’s appearance (or as the case may be) its first appearance.”

As is clear from its terms this rule would not apply to a demand made by CPC on Mr Holyoake because CPC had no reason to believe that he had absconded or was keeping out of the way (and if the demand were issued as an alternative to taking proceedings it would not be for payment of a sum due under a judgment or order).

Mr Stewart submitted that the effect of the rule was to permit advertisement in only those circumstances and hence to prohibit it in any other circumstances. I heard no real argument on the point but I do not think that is right: the purpose of the rule was to provide an alternative to the general position under rule 6.3(2) which provided that a creditor was under an obligation to do all that was reasonable for the purpose of bringing the demand to the debtor’s attention and if practicable to effect personal service. That is how it was treated in the then current Practice Direction: Insolvency Proceedings [2007] BCC 842 at para 11 (headed “Substituted service”) where para 11.1 referred to the creditor’s obligation under rule 6.3(2); para 11.2 provided that

“advertisement can only be used as a means of substituted service” in the circumstances set out in rule 6.3(3) and then set out a suitable form of advertisement, this being addressed to the creditor; and para 11.3 then set out “where substituted service is effected” the quite detailed steps that the creditor must have taken to bring the statutory demand to the attention of the debtor.

These provisions then are all directed at the question of service of the statutory demand. I do not think they have the quite different purpose of prohibiting advertisement in other circumstances, and I do not read rule 6(3) as imposing a statutory restriction on the advertisement of a statutory demand. Any obligation on a creditor not to advertise a statutory demand must I think be found elsewhere.

I can leave on one side any question of defamation, as it was not suggested that the advertisement by CPC of a statutory demand would have been libellous. I can see that a creditor who advertised a statutory demand might be thought to be running a risk of being sued for libel if the alleged debt was not in fact due, as it is no doubt defamatory to suggest falsely that a debtor cannot pay his debts as they fall due. But this as I say was not suggested in the present case, and given that on my findings there had been an Event of Default and the loan was indeed due, CPC would one assumes have had a defence of justification in any event.

What Mr Stewart relied on was the practice in insolvency proceedings. It is well established that in both personal and corporate insolvency, it is inappropriate for a creditor to resort to insolvency proceedings if the debt on which the proceedings are founded is bona fide disputed on substantial grounds. In personal insolvency, a debtor who is served with a statutory demand may apply to set it aside (under what

Mr Stewart submitted that CPC knew very well that its debt was disputed and hence that it would have been an abuse of process to serve a statutory demand in these circumstances. I am not sure about that. The question is not whether Mr Holyoake disputed the breaches, but whether there was anything of substance in the dispute. I accept that the question whether Mr Holyoake was in breach of the net asset provisions (the Minimum Net Asset covenant and the provision of a sufficient net asset statement) would have been the subject of a substantial dispute. But Wragges also relied on the granting of the Aeriance charges as being a breach of the negative pledge in cl 10.1(f). Here there was no dispute of fact, as there is no doubt that charges had been granted over the relevant properties. The only defence Mr Holyoake had was an argument that the clause did not bite as Additional Property was defined to mean one or more properties chosen by CPC from the Additional Property List (being the list of properties included in Mr Holyoake’s net asset statement), and CPC had not actually made such a choice. That was an argument that was identified by Collyer Bristow when Mr Holyoake consulted them after receiving the letter (as appears from Mr Holyoake’s e-mail exchange with them on 13 February 2012 which records advice to that effect from Mr Stephen Gawne of Collyer Bristow). I can see that that is a possible interpretation of the Loan Agreement based on the literal wording, but I have serious doubts whether it is the correct construction as it would seem to lead to a commercially nonsensical result, the purpose of the negative pledge provision being fairly self-evidently to protect CPC against any further erosion of the equity in the properties which made up the Additional Property List. But I do not propose to resolve this question of construction: for present purposes, what is significant is that there is nothing to suggest that this point had been articulated before Wragges wrote their letter of 2 February or that they knew that this point was going to be raised. I am therefore not persuaded that Wragges threatened bankruptcy proceedings in the knowledge that there was a genuine and substantial dispute that there had been an Event of Default and the loan was due. In any event one of the purposes of a letter before action such as this one is to give the proposed defendant an opportunity to explain why he is not liable, and if Wragges had received a reasoned argument why the loan was not due, they would no doubt have considered with CPC whether bankruptcy was in fact appropriate.

Mr Stewart also relied by analogy on the provisions relating to advertisement in corporate insolvency. Under the Insolvency Rules (then rule 4.11 of the 1986 Rules) a petitioner is obliged, unless the Court otherwise directs, to advertise the petition in the Gazette, but the advertisement cannot appear less than 7 business days after service of the petition. That period of 7 days has been said to be to allow the company to consider its position generally with regard to the petition, thereby giving it an opportunity to either discharge the debt if it is not disputed, or apply to restrain advertisement of the petition if it is disputed, and to consider, for example, applying for relief under s. 127 of the Insolvency Act 1986: see re Bill Hennessy Associates Ltd [1992] BCC 386 per HHJ Bromley QC (sitting as a High Court Judge), referring to what Slade J had said in re Signland Ltd [1982] 2 AER 609. In the Bill Hennessy case the petitioner had served the petition on the company and on the same day faxed a copy to the company’s bankers, with the result that the bank immediately froze the company’s bank account. HHJ Bromley held that that was designed to put pressure on the company and was a misuse of the Companies Court jurisdiction and procedures, adding:

“It would, I think, be deplorable if creditors could select for the purpose of maximising pressure on a company whom they would inform, and how, and how quickly.”

The provisions relating to personal and corporate insolvency are not identical and one must be careful about uncritically transposing principles applicable in the one to the other. In the Bill Hennessy case the Court was influenced by the express provisions of rule 4.11 requiring 7 business days to elapse before the petition is advertised in the Gazette, a provision which does not apply in bankruptcy. Nevertheless a person served with a statutory demand in personal insolvency is given a period of time under the rules to apply to set it aside (18 days from the date of service under what was then rule 6.4(1) of the 1986 Rules), and by analogy with the Bill Hennessy case (which it was not suggested to me was wrongly decided) it seems to me that that time is given to the debtor to allow him to consider his position generally, and that for a creditor, before that time has elapsed, to choose who to inform and how for the purpose of maximising pressure on the debtor is inappropriate, and is likely to lead to any petition being dismissed. Indeed no argument to the contrary was put and Mr Lord in closing submissions accepted that the reference to advertising the position was probably something that should not have been done.

That is not to say that CPC knew that it was improper. It was put to Mr Candy that as a businessman he knew that the threat to advertise a statutory demand was improper, to which he said he was not a lawyer and did not know. It was put to Mr Williams that as a chartered accountant he would have known full well that advertising a statutory demand in these circumstances was improper, to which he said that it was not his field of expertise and he was not aware that it was improper. Neither answer seems to me at all surprising and I accept this evidence. I do not consider that they are shown to have done anything other than leave it to Wragges to identify the steps that might be taken, and I find they had no reason to think that Wragges were suggesting anything improper. The threat does not appear to have ever been repeated, and indeed when CPC did resort to litigation (as it did on four occasions, detailed below), it did not serve a statutory demand or seek to make Mr Holyoake bankrupt, but issued claim forms.

After receipt of Wragges’ letter Mr Holyoake spoke to Mr Christian Candy who asked him to come to Guernsey for a meeting on Monday 6 February with himself, Mr Smith and Mr Williams; Mr Holyoake agreed.

He was asked to provide in advance a large amount of information and documentation as to his assets and liabilities and the like. One of the items he was asked to provide was a list of the source and application of the funds used for the GGH transaction. That was not in fact provided by the time of the meeting, but Mr Wells sent it on 8 February. This showed a total of £52m under “Sources of Financing”, made up of Investec (£24m), CPC (£12m), Mr Holyoake (c. £6.9m) and Aeriance (£9.1m), and how that had been spent, almost entirely on GGH. It was misleading in at least two respects, first in not showing the Oscarone loan and second in suggesting that the Aeriance money had been used for the GGH project whereas it had in fact been used to pay 3i. Mr Wells attempted to give an explanation in oral evidence but it was thoroughly unconvincing: I am satisfied that once again the Oscarone loan was deliberately concealed from CPC.

Mr Holyoake went to the meeting on 6 February alone. It started at 3pm and lasted some 4 hours or so. By the end of it an agreement in principle had been reached. Mr Candy had written the outline of it on a whiteboard, a photograph of which was in evidence. With the aid of that and some other material, it is possible to identify the basic structure of the agreement as follows. Mr Holyoake asked for further time to pay and was given until 28 February. In return he would as a first step grant security over the Ibiza property, and there would be new restrictions on him preventing him disposing of assets, taking on new loans or giving new charges, or making new acquisitions without CPC’s consent. On the whiteboard this was due to happen “now”. If he repaid £22.74m by 28 February, that would be that and the parties’ dealings would be at an end. If he did not, there would then be a repayment schedule designed to repay £27.74m by quarterly instalments by the end of September 2013, starting with £5m on 28 February; he would also provide collateral in the form of security over his interest in a valuable stamp collection built up by his father. In default of repayment, the Ibiza property and the stamp collection would be sold in November 2013.

That led to a Supplemental Loan Agreement which was signed by Mr Holyoake on 10 February 2012. It provided as follows;

Mr Holyoake was reluctant to sign the agreement in this form. He thought he had arguments that there had been no breach of the Loan Agreement. He had consulted Collyer Bristow, and both they and he sought to persuade CPC to drop the requirement that he agree that there had been breaches, suggesting that the agreement be redrafted to refer instead to it being CPC’s view that there had been breaches. CPC however refused to do this, Mr Williams saying in an e-mail on the evening of 9 February:

“We will not proceed with this if there is scope to have it set aside by virtue of there being a dispute over whether there is a breach or not – we can have that dispute if you wish but my understanding is that you do not want to go down that route.”

Mr Holyoake gave in on this point and sent an e-mail to Mr Williams on the morning of 10 February saying that they had accepted the agreement with almost no changes, although describing it as “extremely one-sided” and “against advice our side”. Mr Smith, who was copied in, was immediately suspicious of this and suggested it might be “a “set-up” to claim duress at some further point” – he explained in oral evidence that he had seen people write e-mails like that before – and Mr Williams replied to Mr Holyoake that the agreement (which he called the standstill agreement) was:

“not one-sided – you are receiving valuable time to continue to arrange for repayment to occur before the 28^th February.”

Mr Holyoake also wished the agreement to set out what was to happen if he did not repay by 28 February, that is the provision of collateral security and an agreed schedule of quarterly repayments. Again CPC refused, Mr Williams saying that this was an attempt to bring in terms that had yet to be fully examined by CPC, and that CPC would not be bound to the terms of a subsequent agreement in the standstill agreement. Again Mr Holyoake gave in and he signed on the terms that CPC wanted.

I can now return to the question of what was said at the meeting in Guernsey, as it forms an important part of Mr Holyoake’s case. His pleaded case is that at the meeting Mr Candy made a number of statements in the nature of threats to him. As to

Mr Candy’s own description of the meeting was cordial but strained, and that it was neither aggressive nor threatening – he might have been blunt with his language but would have remained professional throughout. He did not claim however to have a good recollection of the meeting, although he had read Mr Williams’ witness statement and agreed with what he said. Mr Williams also described the meeting as cordial, at least to begin with, but quite strained and that it involved some straighttalking as one might expect, but was never anything other than professional. Mr Smith gave a similar account in his witness statement, but in oral evidence it became clear that he had very little recollection of the meeting – he was still recovering from the serious attack made on him – and I do not think his evidence adds anything of significance.

As to the particular statements said to have been made and relied on as threats, it is convenient to take them in turn:

Mr Candy also made a reference at the meeting to Mr Holyoake’s wife Emma. This was a very contentious issue at trial and deserves close consideration. The position is as follows:

Mr Stewart fastened on the shift from “this must be stressful for your wife” to

“this will be stressful … for your wife” and submitted that the word “will” was necessarily referring to a future state of affairs (and hence a threat); however that kind of close textual analysis does not seem to me appropriate. It is unrealistic to expect witnesses to be able to reconstruct the precise words used at a meeting that took place years before.

It is not possible to reconstruct the precise words used but my findings are as follows. Mr Candy did make some reference to Mrs Holyoake at the meeting. I accept that this was in the context of saying how stressful the situation was for everyone – for Mr Candy, for Mr Holyoake and for his wife. Mr Candy also said something along the lines that he would not want anything to happen to her. I am not persuaded that he made specific reference to her being pregnant, as I accept Mr Williams’ evidence that he got the impression Mr Candy and Mr Holyoake knew something he did not. But Mr Candy knew that she was pregnant, and knew that she had had a miscarriage the year before, and in the context that could only be, and was understood to be, a reference to her condition. On the other hand, I am not persuaded that he said it in a threatening or menacing way, or was threatening to do anything in particular. He had been pointing out that unless Mr Holyoake and CPC could reach agreement on a way forward, the alternative would be disastrous for him as CPC would have to take steps to enforce the loan, taking a wrecking ball to his assets, and leave him with nothing, and in that context I find that he was referring to the fact that it would inevitably be immensely stressful for him and his wife. He may indeed, as Mr Williams said, have said it in an empathetic or compassionate tone. Nevertheless it was I think an illjudged and insensitive thing to say.

It did not however tell Mr Holyoake anything he did not already know. According to his e-mail no 4 of 16 April to Collyer Bristow he had already told his wife about the Wragges letter because of the threat it contained to inform the media and because he did not want her finding out about the dispute from some third party; that had upset her and she had worried about the impact of stress on the baby. So the idea that fighting CPC might be stressful for her in her condition was something that he was already well aware of. That I think is why he did not mention it specifically to Mr Gould on 13 February, and I accept that the fact that he himself referred to his wife’s pregnancy in the e-mail of 14 March suggests that he did not regard that as crossing an impermissible line.

Mr Holyoake’s pleaded case also alleges a series of other threats in telephone calls between the Guernsey meeting and the signing of the Supplemental Loan Agreement. These were dealt with very briefly in the evidence and add little to what was said at the meeting. There are three particular allegations that I should deal with. One is that Mr Candy said that if Mr Holyoake did not sign the Supplemental Loan Agreement, CPC would “nuclear bomb him”, a phrase which Mr Candy denied. But it was not in dispute that both sides talked about the “nuclear option” which meant CPC enforcing its demands by litigation. There was some debate as to who had first used the term

“nuclear” in this context: the earliest written reference to it is in an e-mail sent by Mr Holyoake on 4 February, but Mr Nicholas Candy used it the next day, and it is not possible to ascertain, nor do I think it matters, whose word it was originally. Mr Christian Candy explained what was meant by it – if CPC had to litigate it would cause both parties, both Mr Holyoake and CPC, to lose money so it would be mutually destructive. I think it probable that in the period between the meeting and the signing of the Supplemental Loan Agreement CPC (that is Mr Candy or Mr Williams) reiterated what had been said at the meeting, namely that the choice facing Mr Holyoake was to sign the agreement as drafted or face the nuclear option of litigation.

The second is a threat to call Investec to try to make Investec exercise its rights under its security over GGH. Mr Williams remembered mention of Investec at the Guernsey meeting, and Mr Christian Candy accepted that he may have said that he would call Investec. In fact it is clear from internal e-mails that CPC were at that stage considering contacting Investec, not in order to persuade Investec to call default under its loan, but so that CPC could take over Investec’s position, either by taking an assignment of its loan and security, or by paying off Investec. Mr Smith in particular was keen to pursue this, saying in an e-mail of 9 February (to both Candy brothers and Mr Williams):

“We just need to get the revised Agreement signed and then tell him the facts of life: Investec is the only way out.”

He meant by this, as he confirmed in evidence, that the only way out for CPC was to buy Investec’s debt. Mr Christian Candy circulated an e-mail in the early hours of 10 February in which he said:

“We must decide on Friday [ie 10 February], whether and how we take over the Investec position. I see 2 x options:

1)

We buy out the Investec debt, and maintain their documentation and MH has to honour the current Investec documentation [which CPC stands behind]

2)

We repay Investec, and we will need new loan docs with Mark.”

He then referred to the amount they would want a charge on GGH to cover, namely the senior debt of £24m, the mezz (ie CPC’s loan) of £12m, interest on both and the £10m minimum equitable interest, amounting to almost £54m (CPC did not of course then know about the Oscarone loan), and added:

“…that is why we want charges on Ibiza and also GGH, so we have enough equity across the 2 assets to cover this off.

We also need to understand if in Oct 2012 MH fails to repay the senior loan, how would CPC enforce its security to get back the £54.00mn across either/both Ibiza + GGH.”

That seems to me to confirm both that Mr Candy was not then thinking of going to Investec to get them to default the loan, but of taking over their position; and that he did not have in mind calling an immediate default on the Investec loan but looking forward to October 2012 when the loan fell due. Given the terms of these e-mails I am rather doubtful if CPC did refer to contacting Investec at all in this period as they wanted Mr Holyoake to sign up to the Supplemental Loan Agreement first; and even if they did, I am not persuaded that they said anything about getting Investec to default the loan.

The third is an allegation that Mr Candy said that even once Mr Holyoake granted security to CPC over his home in Ibiza, CPC could state there was an ongoing default and try to obtain GGH or use the fact that Mr Holyoake’s home was at risk to force him to give up GGH. Mr Candy said in oral evidence that Ibiza was not on any view sufficient security for the £17.74m, and it would be a difficult asset to sell, so you would need further security other than just Ibiza; he also explained that GGH was the only meaningful asset on the net asset statement as CPC did not want the Icelandic Seafood business, and Mr Holyoake had refinanced a lot of his assets through Aeriance.

In fact although the Ibiza property had been put into the October and November net asset statements at a value of £22.5m (with debt of over £4m) CPC had recently discovered that Savills had valued it for Mr Holyoake at much less, namely €16m. Mr Nicholas Candy had had lunch with Mr Sharpe-Neal of Savills on 9 February who told him that they had valued it for Citibank at circa €16m (for both the house and the additional land), and that Mr Holyoake did not go with the Savills valuation and got another valuer (Jones Lang LaSalle or “JLL”) to do it who came in at €25m. Mr Sharpe-Neal agreed to provide a copy of the valuation to Mr Candy, and later did so. Mr Christian Candy, Mr Nicholas Candy, Mr Williams and Mr Smith all accepted that it was improper and wrong for CPC to have obtained the valuation in breach of confidence. I should make it clear that I have not heard any explanation from Mr Sharpe-Neal or Savills, and they are of course not parties to these proceedings and I am not to be taken as deciding anything that affects them, but it follows that it is common ground between the parties to these proceedings that Mr Sharpe-Neal should not have disclosed the valuation to CPC. For present purposes what is significant is that as Mr Candy said, the Ibiza property was insufficient to cover the £17.74m. I

It is convenient at this stage to give my conclusion on the question whether the Supplemental Loan Agreement was binding on Mr Holyoake.

Mr Stewart relied on three matters in support of a submission that it was not binding. First, that Mr Holyoake was coerced into it by threats directed at his and his family’s welfare (duress to the person). If one puts on one side the remark about his wife, I do not see that anything said at or after the Guernsey meeting was directed in any way at Mr Holyoake’s or his family’s physical safety. The references to ruining his life and the like are all directed at his economic wellbeing. No doubt if he ended up being made bankrupt or losing all his assets that would have a profound effect on his family’s way of life and comfort, but I do not see that that can be equated with a physical threat. Nor do I think that what Mr Candy said about his wife amounted to duress to the person. It was not a threat to do anything to her. It was a reference, however ill-judged and insensitive, to what the consequences might be if agreement could not be reached and litigation ensued. I conclude that the agreement was not voidable for duress to the person.

Second, Mr Stewart relied on threats and pressure against Mr Holyoake’s economic and financial position, which he said amounted to economic duress. Mr Holyoake was indeed threatened with financial ruin if he did not agree. But one needs to retain a sense of reality. The alternative facing Mr Holyoake if he did not agree to the terms CPC wanted was that CPC, who had no security for the loan and no reason to believe that he would repay voluntarily, would be left with no real alternative but to commence proceedings against him, either seeking to bankrupt him or to obtain judgment on the loan. Mr Holyoake had advice from Collyer Bristow, on the basis of which he might have been able to resist any immediate move to make him bankrupt; but that would mean that he would become embroiled in litigation under the Loan Agreement. As he himself explained, once proceedings are issued in relation to a property transaction, the property and the funding for the project are normally ruined – litigation creates a “smell” around the property which puts off buyers. Mr

He repeated this on several occasions but it is worth citing just one example as it sets out with great clarity the considerations that made him decide not to go down the litigation route (from Day 7):

“Sir, the law is a wonderful thing, but unfortunately it doesn't help individuals in certain locations and the reason why it doesn't is because the speed at which the wheels turn does not stop something financially happening that is so catastrophic and difficult to deal with that it doesn't improve the position. I considered deeply taking legal action many times, and it was, I felt, whilst the right thing to do on many levels, it was not going to stop the fact that this project was going to be ruined, our work, effort, profits, commitment to it, everything else was going to be ruined, and more importantly I felt that the backstop position for me would be the bank would probably have enough of two parties fighting and I would still be left with a personal guarantee which would have then caused me double heartache. So I was – I found myself and I felt very much absolutely cornered on this position. Because I couldn't guarantee I could protect the asset but I could guarantee that if I failed to protect the asset they would come after me nonetheless for the money and therefore I would have lost my largest asset, the asset that was going to repay them and I would have lost therefore a lot of the other assets, including my home potentially, that were on my personal liabilities – as a result of my personal liability to them.”

This was the “nuclear option” which CPC also regarded as potentially disastrous for both parties, and which both sides were seeking to avoid.

Signing the Supplemental Loan Agreement meant Mr Holyoake giving up the argument that he was not in breach, and accepting that £17.74m was due, as well as agreeing to give security over the Ibiza property. Those were undoubtedly things he was reluctant to do. But he did so in return for obtaining more time to raise money on GGH to pay off CPC rather than facing the immediate prospect of litigation. I find that the critical factor in his decision to sign the Supplemental Loan Agreement was the threat of litigation and the consequences which he saw that as entailing. That means the substantive question is whether CPC were justified in threatening to bring proceedings against him. The essence of economic duress is the use of illegitimate pressure: I do not see that it can amount to economic duress for a creditor who believes that he has an accrued cause of action against a debtor to threaten to bring proceedings, even if the result is likely to be disastrous for the debtor, and even if the creditor spells out in strong language why it will be disastrous. In fact in the present case I have already concluded that Mr Holyoake was in default under the Loan Agreement, and it must follow that CPC were entitled to bring proceedings. If they were entitled to bring them, they were entitled to threaten to bring them.

Since I have found that it was the threat of litigation that was the critical factor in Mr

The third matter relied on by Mr Stewart was CPC’s threatened approach to Investec on 8 November 2011, the effect of which was to make Mr Holyoake concerned to remove CPC from the project as soon as he could. I accept that Mr Holyoake’s reaction to the threats on 8 November was to realise that CPC were not his friends, and that as a result he decided to try and repay them; but this was all past history by the time of the Supplemental Loan Agreement. By then CPC had discovered the Aeriance charges, as a result of which it had caused Wragges to send the letter of claim and threaten proceedings. And for the reasons I have just given, that would have been likely to lead to Investec discovering the position. The threats made on 8 November did not in my view play any continuing part in Mr Holyoake’s decision to enter into the Supplemental Loan Agreement.

In these circumstances I conclude that the Supplemental Loan Agreement was not voidable for economic duress. Mr Stewart also relied on the lies told by Mr Candy on 8 November 2011 as fraudulent misrepresentations entitling Mr Holyoake to rescind the Supplemental Loan Agreement. That raises a point of law which I deal with below, but my conclusion is that he was not entitled to rescind, and that the Supplemental Loan Agreement was binding on Mr Holyoake.

Mr Stewart also submitted that the requirement to pay the £17.74m by 28 February was so onerous that the Defendants knew that Mr Holyoake would have great difficulty in complying with it and that CPC’s purpose in persuading him to enter into it was to set him up to fail so that they could impose other onerous agreements on him.

I do not accept this. I accept that Mr Christian Candy had by now become very sceptical as to whether Mr Holyoake would come up with the money. On the evening of 6 February he e-mailed his brother referring to “the £10k we will lose on the MH loan”, which was a reference to the bet he had made with Mr Smith, and Mr Candy accepted in evidence that at this point he did not think Mr Holyoake would repay; on

16 February when Mr Holyoake said that a sum of £13.5m would be drawn down

“early next week” Mr Candy expressed the view that the chances of that happening were less than 5%; on 2 March when Mr Holyoake said that he expected the transaction to close as soon as possible, he told his brother that he did not expect the money; on 5 March he said the chances of the £13.5m coming in were less than 10%; and in general it is clear from CPC’s internal e-mails that there was no real expectation that he was likely to pay.

But Mr Holyoake was undoubtedly telling CPC that he would repay. He had told Mr Nicholas Candy on 1 February that he was getting money from the Bank of China and HSBC, with the result that one of the items of information that Mr Williams asked him for in preparation for the meeting was evidence of “the facility being arranged to repay the CPC loan (HSBC/Bank of China?)”. That caused him no little difficulty, but he did provide a copy of a revolving line of credit facility from Bank of China (Hong Kong) Ltd (albeit dating from September 2010, for €630m, and in favour of a borrower whose name he redacted). On the face of it that had nothing to do with a facility to repay CPC, but Mr Holyoake described it as an existing facility which provided for the drawdown of funds, his requirements being only a very small part of the general funding available to others, and said he could discuss it further at the meeting. After the Supplemental Loan Agreement had been signed, Mr Holyoake made a number of references to the imminent prospect of refinancing: on 14 February, in response to a question from Mr Williams whether there was any news from “the East”, he said that they would be proceeding that week, referring to a first tranche of £13.5m and a second tranche to follow; on 16 February he said that “BofC” (that is the Bank of China) had confirmed that they were meeting the next afternoon to finalise matters and the first £13.5m would be made early the next week; and on 20 February that it would now appear that they were going to receive the £13.5m tranche that month but not the £9.25m tranche.

I infer from this that what Mr Holyoake had told CPC at the meeting in Guernsey was that he was proposing to obtain the funds to repay CPC from some source associated with the Bank of China facility, and that it would come in two tranches, a first tranche of £13.5m and a second of £9.25m (together making up £22.75m). That gets partial support from an undated manuscript note made by Mr Williams, which seems very likely to be a note made at the meeting in Guernsey, and which refers to a £22.5m facility to repay, described as “Makmeti” and with reference to a drawdown date of 31 January. Mr Holyoake was in fact hoping to raise funds from a Mr Dmitry Chernyshev, whose corporate vehicle was Mekmetal, and it seems therefore that Mr Holyoake made some reference to this at the meeting.

Thus although it is not entirely clear from this material quite what Mr Holyoake was telling CPC at the Guernsey meeting, it does seem likely, and I find, that he gave them to believe that funds were being made available to him of a total of £22.5m or £22.75m, referring both to the Bank of China and to Mekmetal. Since he also said (according to Mr Williams’ note) that he had liquidity of £4.5m, that would have been more than enough to repay not just the £17.74m but the £22.74m by 28 February.

In these circumstances I do not see how it can be said that CPC set him up to fail the

The first step under the Supplemental Loan Agreement was the giving of security over the Ibiza property. As set out above, this consisted of two parcels of land, one on which the villa stood, owned by Hollywell, and the other some additional land, owned by Blue Valley. The villa and the shares in Hollywell were already charged in favour of Citibank, but the additional land and the shares in Blue Valley were not. The Supplemental Loan Agreement required Mr Holyoake to procure charges over the shares (a first charge in the case of Blue Valley and a second charge in the case of Hollywell) by 13 February, and mortgages over the land (again a first mortgage in the case of the Blue Valley land and a second mortgage in the case of the Hollywell land) by 17 February.

Mr and Mrs Holyoake provided a charge over the shares in Blue Valley, but by 17 February had not provided the charge over the shares in Hollywell or either mortgage. Mr Christian Candy on that day sent Mr Holyoake an e-mail complaining that although he could take a £12m loan off him in 36 hours, it had taken him almost 2 weeks to get security which was still not in place, and that was not fair. He and Mr Williams had a telephone call with Mr Holyoake in the afternoon in which according to Mr Christian Candy Mr Williams “had a right go at” Mr Holyoake; Mr Candy described Mr Holyoake to his brother as a “pathological liar” and his brother replied

“Agreed and I no longer trust him”. In the event Mr Holyoake never did provide security over the villa, ultimately refusing to do so, relying among other things on his wife’s pregnancy as already referred to.

There are four particular matters in the ensuing period that I should note. The first is what was said to CPC about the £13.5m that Mr Holyoake was trying to raise from Mr Chernyshev. Under the Supplemental Loan Agreement payment of the £17.74m was due by 28 February, failing which CPC could enforce its rights. Mr Holyoake as set out above had been promising that at least the first tranche of £13.5m would be available but he was not in fact in any position to pay by 28 February, as no agreement had been reached with Mr Chernyshev. Over the next 2 weeks, Mr Holyoake continued to tell CPC in a series of e-mails that the monies were imminent, ultimately getting Mr Pym to confirm that the monies were Mr Holyoake’s. It is not necessary to set them all out but they culminated in e-mails from Mr Pym to Mr Christian Candy as follows:

I am also satisfied, as submitted by Mr Lord, that at one point Mr Holyoake resorted to having Mr Wells forge a fake proof of transfer, although it was never in fact used. The position is as follows (the timings on the e-mails are again unreliable; I have given what I believe to be the timings in Central European Time, but what is more significant is the sequence of events, which is fairly secure):

This pdf is timed at 16.03 and purports to be a Crédit Suisse document headed

“Paiment en Suisse avec IBAN” which gives details of a transfer of £13.5m to an account at UBS in Geneva, the beneficiary being TPO and the purpose of the transfer (“Motif du versement”) Mark Holyoake, an execution date of 14 March and a probable value date of 14 March. The name of the sender is redacted.

The second matter to note in this period is CPC’s approach to Investec. As referred to above, CPC had already given some thought to taking over the Investec position, and while waiting for the 28 February deadline, internal e-mails show that CPC were taking steps to prepare for this; Wragges were asked to draft documentation, and Mr Smith took advice, including Jersey law advice, as to how CPC could enforce against GGH and what would happen in an insolvency of Hotblack.

By 1 March Mr Holyoake had neither paid the £17.74m contemplated by the Supplemental Loan Agreement nor put in place the charge over the shares in Hollywell; he and his wife had in fact executed such a charge but it had not been dated pending confirmation from Citibank of the terms on which they would consent to it. Mr Christian Candy sent Mr Holyoake an e-mail saying that unless everything was in place by close of play the next day they would call Investec on Monday (5 March) for a full and frank discussion.

Mr Holyoake’s pleaded case is that Mr Candy spoke to him on the telephone on 1 March and told him (i) that CPC was not satisfied with security over the Ibiza property and wanted security over GGH as well; (ii) that he and CPC wanted to take over the Investec facility so that they could obtain full security over GGH; and (iii) that if Mr Holyoake executed the security over his home in Ibiza, Mr Candy would take possession of it and then take GGH too. These are pleaded as threats. Mr Lord in his closing submissions accepted that there was a call on that day (although this is not reflected in the e-mail traffic). The content of the call was not however explored in evidence with Mr Candy. That makes it difficult to assess whether any of these things were said at all. I am rather doubtful about it – in an e-mail of 9 March, Mr Holyoake refers to having just had “the proposal” dropped on him in a call that morning, which I take to be the proposal to approach Investec to take over their position – but even if they were, I see nothing wrong with (i) or (ii) at all. If they were said, they were no more than the truth, which was that CPC did regard the Ibiza property (over which it did not yet have security in any event) as inadequate, and did wish to obtain security over GGH by taking over the Investec position. I do not see them as threats, but as an explanation of CPC’s position. I think it highly unlikely that (iii) was said, as Mr Candy was at this stage still hoping to obtain security over the Ibiza villa, and to say this would only be likely to dissuade Mr Holyoake from giving it.

By Friday 9 March Mr Candy had made the decision that he would approach Investec to take over their position on Monday 12 March. He had a call with Mr Holyoake on the morning of 9 March. It is apparent from later e-mails that he explained to Mr Holyoake that he wanted to take out Investec and would be contacting them on Monday and asked Mr Holyoake to send Investec an e-mail to set up the discussion.

This e-mail at 14.08 is pleaded by Mr Holyoake as a threat to breach cl 20(a) of the Loan Agreement. But I do not read it that way. What Mr Candy wished to speak to Mr Dobson about was taking over the Investec position, that is the Investec facility, and in his e-mail he asks for Mr Holyoake’s contact at Investec “who wrote the loan for you”. The only explicit threat therefore is to talk to Investec about taking over their facility. That did not necessarily involve saying anything about CPC’s loan to Mr Holyoake. Nor did Mr Candy’s actual e-mail to Mr Dobson, which was sent at 14.25 with a subject-line referring to GGH and which said:

“I know Ed Parsons at Candy & Candy has been speaking to you.

Are you free please on Monday March 12^th, as Mark Holyoake [the borrower on GGH], Richard Williams [CPC Group COO] and myself would like a conference call regarding this loan…”

In context, I do not read the reference to “this loan” as being to CPC’s loan to Mr Holyoake, but to the Investec facility.

Mr Stewart submitted that it was to be inferred from this e-mail that Mr Parsons had spoken to Mr Dobson about CPC’s loan to Mr Holyoake in breach of the confidentiality provisions of the Loan Agreement. This is not an inference that can in my judgment be drawn. All that can be demonstrated from the documentary record is as follows. Mr Parsons was Chief Financial Officer of C&C. He was not, and never had been, a director of CPC, although he was a director of Omni. On 8 March he invited a Mr Gilchrist to join him in a box at Cheltenham; Mr Gilchrist replied that he had been at an Investec lunch the previous day and was speaking with Mr Dobson, and had mentioned that “you” (that is Mr Parsons, or C&C, or possibly Omni) might be interested in participating in some of their transactions, to which Mr Dobson had said that they were considering putting together a pool of preferred partners for such transactions and would welcome the chance to meet or discuss this with Mr Parsons. On 9 March, when Mr Candy was planning to contact Investec, he wanted the name of someone appropriate to contact, and circulated an e-mail asking for the name of either Mr Holyoake’s contact, or someone senior. Mr Parsons, who was one of those circulated, replied that the person he had been introduced to was Mr Dobson. That was the context in which Mr Candy sent his e-mail to Mr Dobson at 14.08 referring to Mr Parsons having spoken to him. As can be seen, there is no reason to suppose that Mr Parsons had been speaking to Mr Dobson about the CPC loan – he had been introduced to Mr Parsons so as to speak about participating in Investec’s transactions generally, and there is no trace in the documentary record of his being involved in the CPC loan at all.

On the evening of 10 March Mr Candy had a call with Mr Holyoake. Mr Holyoake asked Mr Wells to join the call. Mr Wells was at a dinner and stepped out to join the

I do not see in this any threats by Mr Candy to do anything unlawful. What was suggested to him in cross-examination was that he was still using Investec as a threat to Mr Holyoake. But what Mr Candy was actually telling Mr Holyoake he was going to do was to approach Investec to buy Investec’s debt. That is not in itself unlawful and would not by itself necessarily involve the disclosure of CPC’s loan to Mr Holyoake. It is possible that Mr Candy did say he would also do this (there is a note of Mr Candy referring to going to Investec “with £12m tell with PG”, which is incoherent as it stands but may refer to Mr Candy disclosing CPC’s £12m loan to Mr Holyoake personally); but this was not suggested to Mr Candy in cross-examination. I am not going to find that he made a threat which is unpleaded, unparticularised and was never suggested to him, and was probably not unlawful anyway (see below). Mr Candy also made it clear that CPC did want security over the Ibiza property, but this was something Mr Holyoake had agreed to give in the Supplemental Loan Agreement. He also said that if CPC did not get what it wanted, it would resort to litigation and enforcement. That may be a threat but is not unlawful.

A conference call had been arranged for 1 pm on Monday 12 March between Investec (Mr Dobson, Mr Austin and Mr Arnst), CPC (Mr Candy and Mr Williams) and Mr Holyoake. Mr Candy made it clear to Mr Holyoake that he was not intending to speak to Investec prior to that call, and indeed suggested they have a pre-call to discuss who said want.

Mr Holyoake however did not want CPC talking to Investec. This was no doubt out of a fear that Investec might disclose the Oscarone loan – indeed Mr Pym had on the night of 9/10 March sent him an e-mail in which he said that the concern was still Oscarone and that it was imperative to delay the call with Investec or somehow get agreement from them not to release the loan details. On the morning of 12 March, after Mr Pym had sent his e-mail of 10.28 confirming that the funds were held to Mr Holyoake’s order, Mr Holyoake said he would cancel the Investec call. Mr Candy replied that it would not be cancelled and if necessary CPC would go ahead on its own; until the monies were with Wragges CPC intended to proceed with the process of buying the Investec debt. Mr Holyoake then sent an e-mail to Mr Austin at Investec effectively postponing the call. He and Mr Candy spoke at about 12.45, after which Mr Candy e-mailed Mr Dobson apologising that the call had been postponed. He said that the purpose of the call was to discuss GGH, that CPC was interested in acquiring the Investec and Topland debt of £24m and had been in discussions with Mr Holyoake about it, and that CPC’s preferred route was an assignment (with the alternative a loan repayment); and asked Investec to consider and revert to CPC. Mr Dobson replied that Mr Arnst would pick this up. Mr Candy then telephoned Mr Arnst and spoke to him briefly (the call lasted less than 10 minutes as Mr Arnst sent Mr Candy his telephone number at 14.51, and Mr Candy reported on the conversation to his brother, Mr Smith and Mr Williams at 15.00). What Mr Candy reported was that Investec were keen to sell at full value and preferred the assignment route, and would revert by Wednesday (14 March). He added:

“I mentioned nothing about the MH issues.”

Mr Stewart invited me to find that the Defendants approached Investec to discuss CPC’s loan to Mr Holyoake, and that in so doing they were misusing Mr Holyoake’s private information, in breach of a duty of confidence and in breach of their obligations under the Data Protection Act 1998 (“DPA”). As to this, the e-mails from Mr Candy to Investec make no reference to CPC’s loan, but only to CPC wishing to take over the Investec facility. There is no reason to doubt that Mr Candy only had the one telephone call, with Mr Arnst. That call was very short, and Mr Candy’s account of it in his contemporaneous e-mail deals only with the question of CPC taking over the Investec facility and expressly says that he mentioned nothing about the issues CPC were having with Mr Holyoake. It was not I think suggested to him in cross-examination that that was untrue. It also receives confirmation from Mr Arnst. Mr Arnst is now resident in Australia and was not called as a witness but the Claimants put in a statement from him under the Civil Evidence Act. In that he says he recalled speaking with Mr Candy on around 13 March, that the purpose of the call was to talk about the Investec loan to Hotblack, that Mr Candy was told that the loan

In his closing submissions however Mr Lord accepted that Mr Candy did tell Investec about the CPC loan. I think this may have been an uncharacteristic slip, and am rather doubtful if I am bound to accept a concession which is contrary to all the evidence, but I will assume that I am. Even so, I do not think there would have been any, or any significant, breach of the Loan Agreement. First, under cl 20(b)(iv), CPC was entitled to disclose any information relating to Mr Holyoake if it needed to disclose it for the protection of its rights under the agreement. It seems to me that if Mr Candy had disclosed the existence of CPC’s loan to Investec, it could only have been because he thought he needed to do this in order to explain to Investec why CPC wanted to take over the Investec position; and CPC undoubtedly wanted to take over the Investec position in order to protect its rights to repayment under the Loan Agreement. Second, quite apart from this, under cl 10.1(c) CPC was entitled to seek security by way of the Additional Property Charge if the £17.74m had not been paid by 12 March. That would entitle CPC to seek a second charge on GGH (being one of the properties on the net asset statement), for which purpose it would have had to speak to Investec, and, as Mr Holyoake accepted in cross-examination, Investec would necessarily have learnt of the CPC loan and there would have been nothing unlawful in CPC speaking to Investec in that way at that stage. Mr Holyoake may well be right that cl 10.1(c) only permitted CPC to approach Investec once there had been a failure to repay on 12 March; but on this footing, it was by the time Mr Candy spoke to Mr Arnst inevitable that Mr Holyoake would not pay the £17.74m that day – he was trying to negotiate terms for payment of £13.5m – and if Mr Candy did reveal the CPC loan to Mr Arnst, he at most anticipated by less than a day what he would have been entitled to do the next day.

The third matter to note in this period is that Mr Christian Candy had a number of telephone calls with Mr Pym, who, it will be recalled, had been a good friend of his. On the afternoon of 9 March he had a call with Mr Pym which Mr Pym gave an account of to Mr Holyoake, describing Mr Candy as “calm during the call and friendly to me”. Mr Pym asked for Mr Holyoake to have more time to resolve the situation but Mr Candy said the conference call had already been arranged with Investec and time was up.

On the morning of 12 March, Mr Candy had another call with Mr Pym. This was the one Mr Candy described as a candid conversation. He had another on the evening of 13 March. Mr Pym made a note of both conversations on 16 March, describing the overall tone of both as extremely aggressive, vindictive and abusive, with Mr Candy seeming less intent on trying to get his money back and more intent on “destroying”

These calls are pleaded as further threats, and Mr Stewart asked me to find that Mr Candy in substance repeated the threats he had made in January and February against Mr Holyoake and his and his wife’s welfare. Mr Lord submitted that Mr Pym’s note, which was not made until some days after the calls and at a time when Wragges had sent a draft claim form to Mr Holyoake (which Mr Holyoake had forwarded to Mr Pym), was unreliable and an exaggeration. I do not think there is actually very much difference between what Mr Pym recorded and what Mr Candy accepted, apart from some of the more colourful phrases. Mr Candy clearly was angry with Mr Holyoake

But in the end I do not think it ultimately matters whether what was said was in an aggressive tone or not. What is significant is whether Mr Candy was threatening to do anything improper or unlawful. Threats to sue Mr Holyoake, pursue him as vigorously as possible, make him bankrupt and thereby ruin him, however unpleasantly expressed, in whatever tone of voice and with whatever colourful language, are not in my judgment threats to do anything more than any creditor is entitled to do. Nor do I think that vague expressions such as “doing whatever it takes” to get his money back, or preparing for the “full weight of CPC to come down on him” or destroying Mr Holyoake’s world and wiping him out are to be taken as threats to do anything unlawful: Mr Holyoake was in fact at one stage advised by his own solicitors that phrases such as “we will take a nuclear bomb to you” are relatively common hyperbole in litigation. It was put to Mr Pym, who was after all the person to whom such statements were made, that he did not understand that Mr Candy was threatening to do anything unlawful, to which he said that he did not know what Mr Candy was planning to do; all he remembered was that the call was extremely aggressive.

The final particular matter that I should deal with in this period is the suggestion that CPC’s actions evidence the conspiracy alleged against the Defendants. The allegation of a conspiracy runs through the entire period of Mr Holyoake’s dealings with CPC but it is convenient to take stock at this stage and consider whether any conspiracy has been established for the period to date.

The pleaded claim is that the Defendants combined together from no later than 10 October 2011 to use unlawful means against the Claimants, the purposes of the conspiracy being (1) to obtain by unlawful means GGH or all or part of the benefit of it and the redevelopment opportunity it represented for the benefit of CPC or the Defendants, or (2) to obtain substantial sums of money by unlawful means from the Claimants.

As recognised by this pleading an unlawful means conspiracy in essence requires (i) a combination between two or more people (ii) to carry out unlawful acts (iii) with the intention of injuring the claimant and (iv) which do injure the claimant.

There are as can be seen two limbs to the pleaded conspiracy, one being to obtain GGH, and the other being to obtain as much money as possible from Mr Holyoake. I will consider the second limb later, but it is convenient to consider the first limb at this stage. This is because Mr Holyoake places great reliance on the fact that Mr Candy did not want to agree terms for the payment of the £13.5m to him, and it is this, he says, which demonstrates that Mr Candy’s real agenda was to get hold of GGH.

The pleaded case takes this conspiracy back to October 2011, and in his closing submissions Mr Stewart asked me to find that the conspiracy had come into existence

Mr Stewart’s next submission was that if the conspiracy had not come into existence on 12 October 2011, it came into existence on 8 November 2011 when Mr Christian Candy agreed with his brother to tell lies to Mr Holyoake about the need to disclose the loan to Investec. I accept that that is evidence of a combination between at least those two to tell lies; and I will assume that an agreement to tell lies is a sufficient agreement to use unlawful means, even if, as in this case, the lies do not deceive as they are not believed. But I can see nothing in the events of 8 November which suggests that what Mr Candy or CPC were trying to do was to put themselves in a position to get hold of GGH. Mr Candy’s explanation in evidence of what he was trying to do was to find out what Mr Holyoake was concealing from them. That is supported by the contemporary internal e-mails and I accept it. In fact of course Mr Holyoake did not reveal what he was concealing from CPC (the Oscarone loan), and these lies, which Mr Holyoake did not believe, did not cause him (or Hotblack) any loss.

Mr Stewart then submitted that the conspiracy came into being in late January / early February 2012 when the Defendants were prepared to use threats at the Guernsey meeting and through the use of Wragges’ letter of 2 February to secure Mr Holyoake’s entry into the Supplemental Loan Agreement. The Defendants did put pressure on Mr Holyoake to enter into the Supplemental Loan Agreement by threatening litigation. But leaving aside the question whether there was anything unlawful in doing so (which I have considered above), I do not accept that they were doing so so as to obtain GGH. I have already said I accept Mr Christian Candy’s evidence that what he wanted, at the time of the telephone call of 31 January and at the Guernsey meeting, was repayment or security, not the asset; and what the Supplemental Loan Agreement delivered to CPC was an acknowledgment that Mr Holyoake was in default, amendments to the Loan Agreement, an agreement to provide security over the Ibiza property, and an acknowledgment that CPC could take enforcement action if payment of £17.74m was not made. It did not give CPC any greater interest in GGH and it was not designed to do so.

That brings me to the £13.5m. Mr Stewart said Mr Holyoake was in a position to draw down £13.5m from Mr Chernyshev, that he offered it to CPC and that they

I do not accept this submission. I do not accept that CPC refused to accept the £13.5m because that would enable them to have a better chance of acquiring GGH. In circumstances where there was a real concern as to whether Mr Holyoake was in a position to, or would, repay anything and where litigation was thought to be potentially disastrous for both sides, it was obviously in CPC’s interest to take the £13.5m if it was available.

The three relevant individuals are Mr Christian Candy, Mr Smith and Mr Williams. Of these Mr Smith had been in his own words a sceptic from the very beginning, and had from the outset been concerned about the fact that CPC had no security. He had expressed the view as early as 9 February that “Investec is the only way out” and that once they had obtained the Supplemental Loan Agreement they should tell Mr Holyoake that. On 10 February his reaction to being told that Mr Holyoake had signed was to say that they needed to decide the timing on Investec. When Mr Christian Candy raised the question on 20 February what CPC should do if Mr Holyoake actually did want to repay £13.5m, Mr Smith’s response was that it would be a nice problem to have, and that if Mr Holyoake did pay them back, they should still seek to take out the Investec loan; as late as 14 March, by which time Mr Candy had come to the conclusion that the £13.5m did not exist, Mr Smith was saying that if it was real they should take it. There is nothing to suggest that he ever thought they should refuse it so as to get closer to the asset. As to the “interesting problem”, on 21 February he said:

“He will say that he doesn’t want to draw down the funds until he has a revised deal.

You can see where he is going with this! Take £13.5m and be happy!”

Then on 28 February he sent two e-mails on 28 February, the first saying that “The fun begins if the money arrives!!” and the second referring to the “interesting problem” if the money comes in. In those circumstances, although it is not entirely clear what he was referring to, I think the most likely explanation is that he was expecting Mr Holyoake to put forward a revised deal as the price of paying £13.5m (which was exactly what Mr Holyoake tried to do in the event), and the “interesting problem” was what the terms would be and whether they would be acceptable. I do not think that he was referring to the problem of how to justify continuing to pursue Investec if £13.5m had been paid off. CPC would still be entitled in that event to the balance of the interest (a further £4.24m) and a minimum of £10m for the profit share, and Mr Smith had long been of the view that the best way for CPC to protect itself was to take over the Investec facility. As he explained in evidence, that would not give them security as such for these amounts, but it would put CPC in the position of first secured chargee which would give CPC control over the realisation of GGH in the event of an insolvency. Taking over the Investec position did not depend on the operation of cl 10.1(c) of the Loan Agreement, but was something that CPC could try and do whatever the amount of the loan still outstanding.

So far as Mr Williams is concerned, on 28 February he sent an e-mail saying:

“If we can get £13m off him it can be used to fund investec facility”

and there is no reason to think that he, any more than Mr Smith, was advocating refusing the £13.5m because it would make CPC’s attack on the asset more difficult.

So far as Mr Candy is concerned, I can equally detect nothing to suggest that he refused the £13.5m because he thought it would make it more difficult to get hold of GGH. What the e-mails show is that Mr Candy was very sceptical that the £13.5m existed at all. That was what he told Mr Pym on 12 March, which is why Mr Pym reported to Mr Holyoake on 13 March that CPC did not believe the money was there, and why he was insistent on the money being sent to Wragges, or, as he suggested to Mr Holyoake on 14 March, to Collyer Bristow. By that stage, as he had told Mr Smith, Mr Williams and his brother earlier that morning, he had come to the conclusion that the £13.5m was not real but an illusion. He told Mr Holyoake that a sensible discussion could be had once Collyer Bristow confirmed they had £13.5m, but no-one at CPC believed he had it. If and when Collyer Bristow confirmed the £13.5m, he was sure CPC would be softer in its position, but until then CPC had no options but to commence legal proceedings. They would no longer chase the £13.5m.

There is no reason to reject that explanation. Mr Holyoake was very indignant that Mr Candy would not accept the £13.5m, but he was trying to persuade CPC to restructure the loan on the basis that he paid them the £13.5m, that he would remain personally liable for the balance of the interest and profit share, but that they would go forward without any default and a much lower net asset covenant and no further security, and Mr Candy, as this e-mail makes clear, was not willing to negotiate until he could be assured the £13.5m existed. Mr Holyoake said in evidence that he did not think there was anything in the Loan Agreement preventing him making an early repayment or partial repayment. I need not consider if he was right about that as he never put it to the test by offering an unconditional partial repayment. Indeed, as already referred to, he was not willing to draw down the money from Mr Chernyshev without having reached agreement with CPC. That was because the £13.5m was not the full £17.74m so unless they had reached agreement with CPC as to what it could do after receipt of the funds, Mr Holyoake would still be exposed to action to enforce the balance. Mr Holyoake would therefore never have completed the transaction until there was a deal on both sides.

I find that CPC never refused an unconditional payment of £13.5m because it was never offered; and that CPC declined to negotiate on the terms on which £13.5m might be paid not because it would make it more difficult to get close to GGH, but because Mr Candy (whose decision it ultimately was) did not believe that the money existed.

That is not the end of the material on which Mr Stewart relies in support of the conspiracy to obtain GGH. When on 12 March Mr Candy reported on his conversation with Mr Arnst, Mr Williams replied that it was encouraging, to which Mr Candy replied as follows:

“I agree. They are 100% sellers. We need to discuss, as I think once we buy this loan, we may want to call default under this loan agreement also.

We need to do what HE did to us, and that is Bad Boy penalties. I think CPC can steal this site off MH if we are clever.”

Unsurprisingly, Mr Holyoake relied on this e-mail as confirmation that Mr Candy’s intention was to steal the site off him, and as proof of the conspiracy to do so.

This needs to be seen in context. On 9 March Mr Holyoake had asked Mr Candy to consider again buying him out “as it feels to me that CPC want the building”; he told Mr Pym and Mr Lovering that he was contemplating a sale to CPC as this in his view was what they wanted; and then on 10 March put forward a proposal to Mr Candy under which he sold GGH to CPC for £45m with all his liability to CPC removed and a profit share for him. On the call that evening Mr Candy rejected this proposal saying he did not want the asset. His thinking at the time is revealed in an e-mail he sent to his brother later that evening. This calculated what the internal rate of return or IRR would be if CPC bought out Investec, and the subject line is:

“If we get the senior position, CPC will make £17.80mn off a £36.00mn investment, so a 40% IRR. A great tax free return.”

The calculation assumes that CPC pays £24m to Investec (hence the total investment of £36m) and recovers a total of £53.8m made up of the senior loan of £24m together with interest of £2m odd, the £17.74m and the £10m profit share, making a profit of £17.8m. The calculation of the IRR assumes that CPC would recover this by 24 December 2012, which I think was probably based on an assumption that CPC would be able to default the loan in October, and then sell it as first chargee. The calculation also shows that CPC assumed that Mr Holyoake had contributed £9m equity himself.

On 11 March Mr Smith, who had been through the Investec documentation, reported to Mr Candy on its terms. He said that he doubted if the CPC loan in itself put the Investec loan in default, but that the Declaration of Trust did. I think he was right about that, as one of the Events of Default under the Investec facility was a failure by the Borrower (Hotblack) to comply with the undertakings in clause 21; and cl 21.7 contained a negative pledge provision under which Hotblack was not to dispose of any of its assets. By the Hotblack Declaration of Trust Hotblack declared that it held GGH in trust for CPC as to 30% of the equity, which seems to me to amount to a disposal in breach of cl 21.7. Mr Candy was interested in the default rate of interest (which was an extra 4% making 19%), and I infer from that that his thinking was that

There was then a discussion between Mr Candy and his brother about selling GGH, with Mr Nicholas Candy putting forward a couple of suggested purchasers who he could speak to but saying he would not do anything until they had the right charges in place.

That is the background to Mr Candy’s e-mail of 12 March referring to stealing the site. As can be seen, what he was thinking about at the time was acquiring the Investec loan, and then calling default on it. That would not give CPC GGH, but it would enable them to have GGH sold. Both Mr Candy and Mr Smith were asked about this. Mr Candy said that if they could buy the Investec debt, he would be in for £36m, he could then call default, appoint a receiver and the receiver could sell it, and the reference to stealing was to acquiring the site for £36m as opposed to the £42m Mr Holyoake had paid, the “steal” referring to getting it at a better price. Mr Smith said that what would happen if they got into the Investec position and there was a default and they called in an administrator would be that the administrator would appoint a sales agent and the site would be sold at market value. If CPC were interested at that value they could make a bid, but if not they wouldn’t. He never saw it as a way of acquiring the site but as a way of protecting the position.

Neither of these explanations seems to me a complete explanation. Neither explains why Mr Candy appears in his e-mail to link the comment about stealing to the “Bad Boy penalties”. This was a reference, as Mr Candy explained, to payments that CPC had to make to their joint venture partner at One Hyde Park as a result of cost overruns (the reference to “HE” being a reference to His Excellency the former Prime Minister of Qatar). In the context of the CPC loan, Mr Candy said he was thinking of charging extension fees to Mr Holyoake for his breaches, and in due course, although not for some months, this is what CPC started doing. In these circumstances I consider the most likely explanation of what Mr Candy meant by stealing the site was taking all the value from the site. If CPC could acquire the Investec position and call default, they could then, as both Mr Candy and Mr Smith recognised, put in a receiver or administrator to sell the site. Mr Candy had already calculated that a sale at a high enough price could produce total recoveries of £53.8m for CPC, and was I think now considering using the imposition of further charges to Mr Holyoake to ensure that even if it sold for more, CPC could take the extra, thereby squeezing Mr Holyoake out of any remaining equity.

That seems to me to get some support from an e-mail from Mr Candy to Mr Smith, Mr Williams and his brother on 14 March (at 12.10) in which he says:

“what we know:

1)

He has lied to Investec, and they will be pissed if they find out about this, and

2)

He has no money to repay us, and we have a charge on his house

3)

His options today are limited. He needs to find £17.75mn in 10 working days to repay CPC, otherwise he has bankruptcy proceedings in process against him,

and he may lose his house. He has no real assets to gear to repay us. He will need to sell the asset today over £52.00mn to start recovering his equity. This will [be] tough when proceedings start against him.

Why don’t we offer this to Mark:

1)

Give us GGH

2)

MH loses his equity of £9mn

3)

MH gets off Investec knowing what he did

4)

MH gets the charge removed from his house

5)

CPC are then in for a breakeven position of £36mn, so our equity is safe.

6)

CPC then get to recover 100% of its monies over £36mn, so it needs to get to £52.00mm to get all of its returns

MH gets to walk away, and he loses £9mn as a lesson to himself.”

This seems to me to represent a development of his thinking. The problem with taking proceedings against Mr Holyoake would be that he would have to sell GGH and it might not reach £52m – the reference to it being tough when proceedings started against him being a recognition of what Mr Holyoake referred to as the effect of creating a smell around the property, or tarnishing the building – and so CPC might not recover the full £52m. The same would no doubt be true if CPC took over the Investec position and called default. In practice therefore Mr Candy thought that Mr Holyoake was already in a position where he stood to lose the £9m Mr Candy believed he had put in, and this suggestion was intended to put CPC in a better position, and Mr Holyoake in no worse a one, then they already were. In effect it would mean that CPC would obtain GGH, not so as to develop it but so as to give it the best chance of selling it and recovering the returns which CPC was contractually entitled to.

I find therefore that Mr Candy was planning ways of effectively acquiring control of GGH so as to recover for CPC all the monies that it was entitled to and leave nothing for Mr Holyoake. But it does not follow that there was any combination to do that by unlawful means, and I find that there was not. The plan was to take over Investec’s position and use the rights given to Investec in the Investec facility to put CPC in the best position to recover what was due to it. There was nothing unlawful in taking an assignment of Investec’s debt. Mr Stewart also referred to the Defendants being willing to use allegations of contractual breach (whether or not legally sustainable) to achieve their objectives; but I find that the Defendants did think they would be entitled to default the Investec facility once they had it (as a result of Hotblack granting the Declaration of Trust); and although at this stage Mr Candy was thinking of using extension fees to squeeze Mr Holyoake out of any remaining equity, this plan was not then put into action. I consider below whether there was anything wrong in the extension fees that were later charged.

The plan did however require Investec to agree to allow CPC to take over its position.

But by 15 March Mr Holyoake had spoken to Investec and persuaded them not to agree to an assignment of the facility. He told Mr Candy that on a telephone call (and Mr Currie later confirmed it to Mr Smith). That led to a different proposal, discussed on the telephone call on 15 March, under which CPC would lend Mr Holyoake the money to pay off the Investec facility, Mr Holyoake would by 26 March pay the £13.5m and give security over the Ibiza property and, in default of doing so, ownership of GGH would be transferred to CPC in full and final settlement of Mr Holyoake’s obligations. That was effectively similar to the suggestion in Mr Candy’s e-mail of 12 March at 12.10 with the addition of the opportunity for Mr Holyoake to provide both the £13.5m and the security over the Ibiza property. Since Mr Candy thought that the £13.5m did not exist, it is perhaps not surprising that he e-mailed Mr Simpson on 16 March to the effect that “It is probable, confidentially, that CPC will take possession of this site next week, and will own 100% of it”: if Mr Holyoake did agree to this proposal, Mr Candy expected the outcome to be that CPC would acquire GGH.

Mr Holyoake however never did sign up to the proposal. On 16 March Wragges sent a letter to Collyer Bristow with a draft claim form and particulars of claim; the claim was issued in the Commercial Court on 19 March and served the same day. The claim was for the £17.74m, on the basis that Mr Holyoake had failed to comply with the terms of the Supplemental Loan Agreement (having neither provided security over the Ibiza property nor paid £17.74m by 28 February) with the result that CPC could enforce the Loan Agreement on the basis of the breaches identified in Wragges’ letter of 2 February.

On 19 March (the day it was issued and served) CPC sent a copy of the claim form to Mr Dobson and Mr Arnst at Investec, and thereafter sought to engage Investec in a discussion. Mr Stewart submitted that the approach must be taken to be a deliberate attempt to destabilise Mr Holyoake’s relationship with Investec. I find that the purpose of doing so was, as Mr Christian Candy accepted in evidence, to persuade Investec to allow CPC to take over their position. The approach however failed as Investec was not interested.

Mr Holyoake alleges that at around this time Mr Nicholas Candy interfered with a potential purchaser. The facts are as follows. It can be seen from e-mails that by 22

The next relevant allegation concerns an approach by CPC to Mr Clifford Knuckey. The facts are as follows. On 30 March Mr Nicholas Candy circulated an e-mail in which he said that the more he heard about Mr Holyoake, the more he thought he was a serial fraudster, and said he would not be surprised if he had been in prison. I should say that I have heard nothing to suggest that there was any basis for this – it was just speculation by Mr Nicholas Candy. He also said that Mr Wells needed to be brought into the proceedings as well. Mr Dean, who had recently (on 27 March) been asked by Mr Christian Candy to take over responsibility for the litigation, replied that he was checking with Wragges and they were securing a quote from a private investigator to see if Mr Holyoake or Mr Wells had been in prison. I have not seen any response from Wragges, which would no doubt be privileged, but on 2 April Mr Smith responded to a redacted e-mail with the subject line “Re: Fees Quotation” by saying that Cliff might be able to do this, Cliff being a reference to Mr Knuckey, who was then the Chief Executive of a private investigations company he had set up in about 2009 called Hermes Forensic Solutions Ltd (“Hermes”). I infer that the redacted e-mail contained advice from Wragges as to what could or could not be done and perhaps some explanation of the potential cost. Mr Christian Candy asked Mr

Mr Knuckey is a former police officer who retired from Scotland Yard in 2003; he was a Detective Inspector with over 30 years’ police experience and had led Scotland Yard’s Money Laundering Investigation Team. Mr Smith knew him because Mr Smith had been since October 2005 a non-executive director of a company called RISC Management Ltd (“RISC”), of which Mr Knuckey was for a time the Managing Director. RISC described itself as an international risk management and corporate investigations company whose core services included corporate investigations (fraud inquiries and asset tracing) and business intelligence (enhanced due diligence). Mr Smith in evidence described RISC’s business as classic private investigation-type work, doing KYC checks and the like, and confirmed that CPC retained RISC to carry out KYC checks on potential purchasers at One Hyde Park. In November 2009 CPC also retained RISC to investigate one of the purchasers, a Mr Geoffrey Logue, who had a dispute with the developer (PGGL) about variations in the layout of the apartment, as CPC admitted in its Defence to proceedings subsequently brought by Mr Logue (“the Logue proceedings”); and in January 2010 CPC engaged Hermes (that is Mr Knuckey), initially to investigate the source of Mr Logue’s funds, and thereafter on other aspects of the dispute.

On the basis of the Knuckey e-mails Mr Stewart submitted that what Mr Knuckey was offering to do, and what CPC through Mr Smith was asking him to do, was to carry out criminal record checks that involved access to some non-publicly available source such as the Police National Computer (“the PNC”) and hence were, and were known to the Defendants to be, unlawful.

This was based on three matters: first, that the £200 charged by Mr Knuckey was excessive for an internet search; second that an internet search would not have required Mr Knuckey to call in a favour; and third that Mr Knuckey was a man of dubious reputation and background such that his instruction by Mr Smith was sinister, it being hard to see how such checks could be carried out lawfully or how the Defendants could have thought that they could.

There are a number of difficulties with this submission. First and foremost, a similar argument has already been rejected in previous litigation between the parties: see Holyoake v Candy [2017] EWHC 52 (QB). Mr Holyoake had made a subject access request under s. 7 of the DPA against Mr Nicholas Candy and CPC. That sought data under a number of headings, including communications containing Mr Holyoake’s personal data between Mr Candy and USG Security Ltd. Mr Candy’s response to the request accepted that some data existed in this category, but claimed litigation privilege in relation to it. It is well established that litigation privilege cannot be maintained in respect of documents that are evidence of criminal conduct, and Mr Holyoake contended that the privilege was lost through breach of s. 55 of the DPA, which makes it an offence to obtain personal data unlawfully. For this purpose Mr Holyoake relied on the Knuckey e-mails as demonstrating the commission of an offence under s. 55 of the DPA, and specifically that Mr Knuckey must at least have gained access to the PNC. Warby J held that whatever the Knuckey e-mails revealed, they did not assist in showing that the separate USG data might contain evidence of criminality. That was sufficient to dispose of the point, but he went on to say that he would in any event have decided the issue against Mr Holyoake on the additional footing that there was no real basis for believing that the events evidenced by the Knuckey e-mails involved a s. 55 offence: see at [79]. Mr Knuckey expressly told Mr Smith that he could not get details of spent convictions, but Warby J found that it was inherently unlikely that the PNC was confined to unspent convictions; this was confirmed by reference to authority, and was consistent with his own experience in criminal cases. In those circumstances his conclusion (at [83]) was that:

“In short, the Knuckey e-mails do not suggest that Mr Knuckey gained direct or indirect access to the PNC; they suggest the opposite. Hearsay evidence of bad character in the form of newspaper cuttings about other alleged conduct of Mr Knuckey is relied on by Mr Holyoake, but cannot alter these facts.”

Although Warby J said it might be thought undesirable for him to pre-empt decisions that had yet to be made in the present proceedings, it does seem clear that this was not a tentative or provisional view, but his considered decision on what he described as a matter in issue before him which had been sufficiently explored in evidence and argument to allow a safe conclusion. I consider in the circumstances that what he said about it is not an obiter or incidental comment, but a second ground for his decision.

Mr Lord submitted that the conclusion of Warby J on the point was one that the Claimants were precluded from collaterally attacking by the principles of issue estoppel or abuse of process; see Hunter v Chief Constable of the West Midlands [1982] AC 529, Arthur JS Hall & Co v Simons [2002] 1 AC 615, Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. None of these was in fact a decision on issue estoppel, strictly so-called, which as I understand it is a principle based on the binding effect of matters decided in previous litigation, and as such only affects the parties to that litigation and their privies (see Hunter at 541A per Lord Diplock). Of the Defendants to the present action only Mr Nicholas Candy and CPC itself were parties to the previous action, and only Mr Nicholas Candy was relying on the point on legal privilege and hence directly affected by Warby J’s decision on this point. I

The principle of abuse of process however is a wider one which prevents a party from making a collateral attack on an earlier decision even if the parties are not identical and they are not strictly bound by it. The relevant principles are set out by Morritt V-C in the Bairstow case at [38]. Not every collateral attack is an abuse of process; if the earlier decision is that of a civil court and the parties to the later proceedings are not bound by the earlier decision it will only be an abuse if it is manifestly unfair to a party that the issues should be relitigated, or if to permit this would bring the administration of justice into disrepute. In my judgment both tests are here satisfied. Although the issue in the earlier proceedings only directly affected Mr Nicholas Candy, it would be artificial to regard the other Defendants to this action as if they were mere bystanders to whom the outcome of the DPA proceedings was irrelevant. By the time the DPA proceedings were brought, the present proceedings were already on foot, and the parties had been divided into two hostile camps, with Mr Holyoake and Hotblack on one side, and the Defendants on the other. There has never been any suggestion that the interests of the Defendants diverge: they served a single Defence, and have at all times been represented by the same solicitors and counsel. Warby J found that one of the purposes of the DPA proceedings, and a significant one, was to obtain disclosures which might be deployed in these proceedings: see his judgment at [47]. In effect therefore, although brought as separate proceedings in a different division of the High Court, the DPA proceedings were, at least in part, a preliminary skirmish in the present litigation, and indeed they might have been capable of being brought by way of an interlocutory application in these proceedings. In those circumstances all the Defendants had exactly the same interest as Mr Nicholas Candy in seeing off Mr Holyoake’s attack on his claim to privilege. Even if strictly speaking they were not privies to the earlier decision, it would in my judgment be manifestly unfair to them if Mr Holyoake, having lost on this point before Warby J, were now able to run the same point before me: cf the comments of Lord Hoffmann in Hall v Simons at [2001] 1 AC 701D on Reichel v Magrath (1889) 14 App Cas 665:

“Although the parties were different, the case was within the spirit of the issue estoppel rule.”

It would also in my judgment bring the administration of justice into disrepute: see the extract from the speech of Lord Halsbury LC in Reichel v Magrath at 668 cited by Lord Diplock in Hunter at 542C:

“I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the case again.”

There is an exception if some new fact has been discovered which, in the words of Earl Cairns LC in Phosphate Sewage Co Ltd v Molleson (1879) 4 App Cas 801, 814,

“entirely changes the aspect of the case”: see Hunter per Lord Diplock at 545C-E and Bairstow per Morritt V-C at 14B-F. But no attempt has been made to satisfy that test here, and it appears that the material and arguments deployed before Warby J were much the same as those deployed before me.

In those circumstances it is not strictly necessary for me to express my own view. But I will say that I see no reason to reach a different conclusion from Warby J in any event. Warby J gave reasons for concluding that the PNC contains details of spent convictions. No attempt was made before me to adduce evidence suggesting that that conclusion was wrong (and for what it is worth, it is consistent with my own experience of sitting in criminal cases, the antecedents of the defendant being regularly placed before the Court whether spent or not). That seems to me to make it very unlikely that Mr Knuckey accessed the PNC as the one thing that is clear is that he told Mr Smith that he could not get details of spent convictions. I have not understood why he should have told Mr Smith that if the reality was that he could, and had. In those circumstances I do not think any safe inference can be drawn from the fact that Mr Knuckey charged CPC £200 (which Mr Smith at any rate thought was cheap, rather than expensive, perhaps by contrast with what Wragges were suggesting), or as to what Mr Knuckey meant by calling in a favour. Other than accessing the PNC there was no suggestion as to what he might actually have done (unlike Warby J, I was not given any evidence as to the means by which information about criminal records can be obtained legitimately from public sources), and once the suggestion that Mr Knuckey had accessed the PNC has been rejected, I do not think I can find he behaved in some other unspecified improper way, far less that CPC instructed him to.

A number of allegations about Mr Knuckey’s conduct were ventilated in the course of the trial, but Mr Knuckey was neither a party to these proceedings, nor gave evidence, and, as Mr Stewart recognised, that means that I should be cautious about making any findings about his conduct unless it is necessary. Thus for example Mr Knuckey was arrested, with considerable publicity, in May 2012 (that is subsequently to the Knuckey e-mails) after allegations had been made that he and RISC had been involved in passing defence information to the police and bribing police officers; Mr Knuckey was in the event charged with one offence and acquitted. I do not propose to decide, nor do I have the material to do so, whether there was any basis for suspecting Mr Knuckey of such behaviour; all that is material is whether it is shown that Mr Smith knew of such matters in April 2012 and there is nothing to suggest that he did. The same applies to allegations against Mr Knuckey aired much more recently in press articles dating from October last year; although the underlying allegations date back to 2007, it is not shown that Mr Smith knew anything about them.

The one thing that can be said is that Mr Logue made allegations in the Logue proceedings that Mr Knuckey had sought to elicit information from him by dishonest and underhand means, including at one stage impersonating a representative of the Saudi royal family and at another claiming to be a representative of Vodafone, and that in July 2010 Roth J, who heard an application by Mr Logue to discharge a freezing order that had been granted against him, in part on the basis of Mr Knuckey’s evidence that he was evading service, was of the provisional view that it was highly unlikely that Mr Logue had invented his account: see The Complete Retreats Liquidating Trust v Logue [2010] EWHC 1864 (Ch) at [39]. Mr Smith accepted in evidence that he had read Roth J’s judgment at the time; that having discussed it with Mr Knuckey, he had proceeded on the basis that he accepted the judgment; and that there were no excuses for Mr Knuckey’s behaviour (albeit Mr Smith understood that he was seeking to serve proceedings on Mr Logue). He also accepted, albeit with hindsight, that he should not have used an investigator who to his knowledge had behaved improperly in the past, but said that he probably did so out of laziness, it being easier to pick up the phone to him than start from scratch.

That no doubt evidences a slightly casual attitude to wrongful behaviour by Mr Knuckey, but cannot I think make good the allegation that Mr Smith engaged Mr Knuckey to act unlawfully when he asked him to find out whether Mr Holyoake or Mr Wells had criminal convictions. If, therefore, contrary to the view I have expressed, this point is open to Mr Holyoake in these proceedings at all, I find that it has neither been established that Mr Knuckey obtained the information from the PNC or some other illegitimate source, nor that the Defendants asked him to.

The next allegation concerns a telephone call between Mr Nicholas Candy and Mr Holyoake on 4 April 2012. This is the most serious of the remaining allegations – indeed the most serious of all Mr Holyoake’s allegations – and requires detailed consideration.

Mr Holyoake’s pleaded case is that during the conversation Mr Nicholas Candy made the following threats: (i) he told Mr Holyoake “as a friend” that Mr Holyoake must do everything Christian Candy demanded; (ii) he stated that if Mr Holyoake did not, Christian Candy was going to sell the debt to certain people, potentially Russians, who would not think twice about hurting Mr Holyoake or his family to get what they wanted; (iii) he warned that Mr Holyoake needed to understand that Christian Candy would do this and was about to do it if Mr Holyoake did not do everything he wanted; and (iv) he further warned that Mr Holyoake had better listen to Christian Candy and do everything needed, because he (Mr Nicholas Candy) did not want to see Mr Holyoake or his family physically hurt. It is then pleaded that Mr Holyoake was extremely alarmed by this conversation, which he took to be, and which amounted to, a direct threat of direct physical violence against himself and his wife and children, and that he immediately hired private security guards at home for his wife and children.

I will start with what the contemporaneous e-mails show. On 3 April CPC sent a letter to Mr Holyoake formally requiring him to procure the grant by Hotblack of a second charge over GGH by 11 April in accordance with cl 10.1(c) of the Loan Agreement (which required Mr Holyoake, if he had not repaid the £17.74m by 12 March 2012, to procure the grant of the Additional Property Charge within 30 days). It also sought extensive financial information under cl 10.1(d)(4) including confirmation of the source of funds used to purchase GGH. That reflected the fact that on 18 March Mr Christian Candy had asked Mr Holyoake to confirm that he had used “only your own equity, and CPCs £12mn equity, and no other third party equity was used” to which Mr Holyoake had replied “That’s correct”, but that Mr Nicholas Candy had heard on the grapevine that there was other equity in the deal, and when Wragges asked Mr Saunders to confirm whether any other source of funds was used for the acquisition, there was no answer. After repeated stalling by Mr Holyoake, Mr Gould of Collyer Bristow did on 30 March repeat to Wragges Mr Holyoake’s confirmation that there was no other equity provider to Hotblack, but Collyer Bristow were not of course involved in the purchase, and it is apparent that CPC continued to be sceptical. Also on 3 April Wragges sent a letter to Collyer Bristow requiring Mr Holyoake to sign an undertaking by 11 April to complete the charges over the Ibiza property.

On 4 April Mr Dean sent Mr Nicholas Candy an e-mail (timed at 18.03, although the time stamps are again confusing), copied to Mr Christian Candy, with details of what he should say on a proposed call to Mr Holyoake. That referred to the current status (that CPC’s letter required by 11 April a charge over GGH and extensive financial information, and Wragges’ letter required charges over the Ibiza property), and a proposal that Mr Candy was to put to Mr Holyoake on a without prejudice basis, which involved Mr Holyoake putting a charge on GGH and putting the charge over the Hollywell shares in place, in return for which CPC would drop the claim and accept that repayment of the loan was not due until October 2013. The e-mail then continued:

“Perhaps mention the following

1.

We have received very positive feeback from senior QCs (including Seafoods barrister Sonia Tolaney)

2.

Chris is very angry at the position and there is talk of freezing orders, injunctions, summary judgement and bankruptcy

3.

Point out that once Chris bunkers down he will keep fighting until he wins – mention that he has dragged me off some other litigation to focus on this

4.

We have been approached by a debt collector to buy the obligation – they will not be as balanced as CPC

5.

Really is a last chance to resolve this – he must get this done by next Wednesday [ie 11 April]”

Later on 4 April both Mr Christian Candy and Mr Dean asked Mr Nicholas Candy if he had had the call, and he replied that he had just got off the phone and could update them. What he told them was set out in an e-mail the next morning from Mr Dean which recorded that Mr Holyoake had said he was repaying the loan before the deadline so the proposal was not relevant, and that he was adamant that he would not give security for the profit share.

Meanwhile Mr Lovering had asked Mr Holyoake on the evening of 4 April how Mr Nicholas Candy was, to which Mr Holyoake replied (copying in Mr Pym):

Mr Lovering replied:

“Do you tell the lawyer….debt collector!?!?!”

And Mr Holyoake responded:

“I know also said they were building a big legal team etc etc etc

The next morning Mr Holyoake e-mailed Mr Lovering and Mr Pym saying:

“If any news let me know as have cpc on my case and would love to tell them where to go ! Got to call nick in 30 mins too no doubt to listen to more veiled threats.”

It is helpful next to consider the various accounts subsequently given by both sides. In chronological order they are as follows:

Mr Nicholas Candy’s oral evidence was that the call was a nice call, a friendly one, not a hostile or aggressive one: he and his wife (then fiancée) were in Los Angeles at Venice Beach at lunchtime doing a food tasting with a person they were thinking of using for their forthcoming wedding, the sun was shining and he was in a happy mood. He suggested that he and Mr Holyoake had dinner together when he got back to London, which they did at Nobu on 20 April. He said he did not threaten Mr Holyoake, he himself had been threatened with kidnapping and it was the worst feeling in the world and he would never threaten anyone, that was not how he was or how he behaved. He had simply followed the script he had been given, with his mobile in one hand and his blackberry with Mr Dean’s e-mail in the other.

Mr Lord asked me to find that this extremely serious allegation is baseless and should never have been made.

I have not however found it quite so easy to dismiss it out of hand. First, there is the fact that Mr Holyoake increased his security in Ibiza not long afterwards. Although his pleaded case was that he did so “immediately”, Mr Holyoake corrected that in evidence to “promptly”, by which he meant within weeks, but I do not regard that change as of significance. It is not disputed that Mr Holyoake signed a contract (in Spanish) which provides for various security services to be provided to him at an estimated monthly fee of €9000; the contract is dated Ibiza 4 July 2012, but Mr Holyoake’s evidence was that the security guards were hired initially on a trial basis for 2 or 3 months before they went to contract, which I do not find difficult to believe.

Mr Lord submitted that it was a lie to say that what prompted the hiring of the security guards was the telephone call of 4 April as Mr Holyoake and his wife had been exploring the hiring of security in November 2011, long before it is alleged that CPC made any physical threats to him. This was based on e-mails from November 2011 which show (i) that on 21 November a Mr Anton Bilton e-mailed a Mr Simon

The fact therefore that these quotations were obtained in November 2011 (but security of this type was not then hired) does not detract from the fact that Mr Holyoake did increase his security at the Ibiza property from some time in the spring of 2012. Mr Lovering who visited the Ibiza property twice, once in 2010 and once in the summer of 2013, contrasted the safe and open atmosphere when he first visited when there was no security – something that was confirmed by Mr Nicholas Candy who said that whenever he went to stay with Mr Holyoake, which he had done many times, Mr Holyoake had lots of staff but no security – with the Fort Knox like atmosphere of his second visit with cameras and people checking you in. Mrs Holyoake said that she still had security at the estate, and again I accept this evidence.

Then there is the evidence as to whether it was true that CPC had been approached by a debt collector:

Moreover, as referred to in more detail below, in July 2012 Mr Candy did think about going to debt collectors but did not go back to Mr Smith and ask him to contact those who had been in touch with him; instead he went to Mr Knuckey. That is in itself a rather odd thing to have done, as one would have thought the obvious first port of call for advice as to how to enforce a judgment would be Wragges; but it does raise the question why Mr Candy did not simply ask Mr Smith to contact those who had been interested in buying up debts to see what they would offer. All this raises real doubts as to whether it was true to say that CPC had been approached by a debt collector who might have bought this debt.

Then there is the curious feature of the reference to Russians. When Mr Holyoake first made the allegation, in the draft Particulars of Claim, it included an allegation that there had been a reference to the Candys having strong links to Russian buyers. Wragges’ answer to that was that Mr Nicholas Candy had no recollection of the call but that it was desperate to suggest that the mere mention of Russians was menacing. By the time of the Defence in these proceedings, the Defendants’ position was that Mr Nicholas Candy “may have” referred to Saudi Arabians or Russian buyers. When he came to give oral evidence he said that he had indeed referred to the Saudis who Mr Holyoake had originally been planning to borrow from, or the Russian that he was going to borrow £13.5m from, and said:

“If your Russian is there with his 13 and a half million, your Saudi guy that was there on 13 October, get them to do it.”

This is a very odd piece of evidence. Leaving aside the way that his recollection has apparently improved since the allegation was first made, Mr Nicholas Candy was by his own account closely following Mr Dean’s script. The script said nothing about Mr Holyoake finding someone else to buy the debt – it was designed to persuade Mr Holyoake to agree to put charges in place by 11 April or face the consequences. There had been no reference to Saudis as potential investors since the inception of the loan in October; and Mr Holyoake had been promising the £13.5m from Mr Chernyshev for 2 months without any sign that it would actually happen. I think it very unlikely that Mr Nicholas Candy said this at all. But if he did not, that raises the question why he gave this evidence, and whether the explanation might not be that there was indeed a reference to Russian buyers after all, and he was seeking to explain this away.

Then there is the whole question why the script mentions debt collectors at all. The purpose of these points was to reinforce the message that it would be better for Mr Holyoake to agree to give the charges than to face the alternative. Point 2 of the points for Mr Nicholas Candy to “perhaps mention” referred to CPC seeking freezing orders, summary judgment and bankruptcy. It is not clear what the suggestion of selling the debt to someone else was intended to add to that. It was perhaps unlikely that a bank or other legitimate buyer would buy a debt that was disputed, as they would simply be buying litigation; but even if they could be persuaded to, they could scarcely do any more than CPC were itself threatening to do. If the reference were instead to obtaining summary judgment and then selling the judgment, there was no reason to think that CPC would be at all hesitant to collect on a judgment it had obtained. Its hesitation in pursuing Mr Holyoake more vigorously to date was because it could see that litigation was a risky course for it to pursue.

For all these reasons I am left in real doubt as to quite what was said on the call. I have no difficulty in accepting that Mr Nicholas Candy’s tone was friendly enough. Mr Holyoake himself said that Mr Nicholas Candy was “trying to pretend he’s my friend” and that he did not know whether Mr Nicholas Candy was being a good friend to him, nobly trying to help him, or was involved in it and being conspiratorial. (It is in fact clear from CPC’s internal e-mails that Mr Nicholas Candy had long since lost faith in Mr Holyoake’s integrity (indeed since the end of January 2012 when the Aeriance charges were discovered), felt guilty for having got his brother into the position where he stood to lose his money, and was fully behind doing what was necessary to recover it.) Nor is it suggested that Mr Nicholas Candy made any threats to do anything himself: the message he was asked to convey, and did, was that his brother was angry and that Mr Holyoake had to do what was proposed or else his brother would take various steps. What I have found more difficult to resolve is whether he crossed the line to suggest that one of the steps his brother might take was to sell the debt to those who might resort to violence.

In the end however, despite my doubts, I find that this allegation has not been established. I find it very striking that Mr Holyoake did not refer to this call in his e-mails to Collyer Bristow of 16 April. That was less than two weeks after the call,

In those circumstances although there are a number of unanswered questions, I find that this allegation has not been made out.

Although Mr Holyoake’s pleaded case is that thereafter the Defendants continued to apply unlawful pressure, threats, intimidation and coercion against him, there are no more examples pleaded of specific threats, and it is possible to deal with matters more briefly.

The period from 4 April to 14 June 2012 was taken up with negotiations for alternative solutions, while the time for Mr Holyoake to serve a Defence in the Commercial Court proceedings was repeatedly extended. A number of possibilities were taken forward in turn, but since none of them were completed it is not necessary to consider them in any great detail. The first suggestion was to make use of the fact that Mr Holyoake had paid the £12m lent to him by CPC into Hotblack by way of loan, the suggestion being that he “novate” this loan to CPC (in fact I think better described as an assignment than a novation). Mr Lord submitted that the initiative for this idea came from Mr Holyoake, whereas an e-mail from Mr Dean of 11 April suggests that it had emanated from Wragges, but I do not think this is significant. What matters is that Mr Holyoake was willing to take this forward. That incidentally involved Mr Wells falsifying a number of documents. On 16 April Mr Holyoake forwarded to Mr Dean a form of loan agreement between Hotblack and himself. Mr Wells had adapted this from a loan agreement which had been duly entered into in October 2011 (it is dated 7 October 2011 although probably executed rather later). The original 2-page agreement on page 1 recited (at recital B.) Hotblack’s intention to finance the purchase of GGH using a combination of facilities including the Investec loan of £24m and the Oscarone loan of £7.5m, and provided in clause 1 for Mr Holyoake to lend £14m to Hotblack; on page 2 it was signed by Helen Crichton as director of Hotblack. Mr Wells adapted this by replacing page 1 with a new page that recited (at recital B.) Hotblack’s intention to finance the purchase by a combination of facilities including the Investec loan of £24m and a loan from Mr Holyoake of £20,750,000; and provided in clause 1 for Mr Holyoake to lend £20,750,000. What Mr Holyoake forwarded to Mr Dean was a pdf of the new page 1 (dated 12 October 2011) and two versions of the original page 2, one signed by Ms Crichton and the

By 17 April the novation idea had evolved into a proposal that a new company be inserted above Hotblack and that there be a distribution in specie of GGH to the new company. Mr Holyoake appeared to be willing to progress this transaction. It required Investec to co-operate and on 25 April Mr Holyoake told Mr Dean that he spoken to Investec and they were happy with the proposal provided their position was not prejudiced; he confirmed this in an e-mail the next day. I accept Mr Lord’s submission however that Mr Holyoake cannot have been sincere as the proposal would necessarily involve Investec and an intercreditor deed, and would inevitably have led to Oscarone coming to light, which would have prevented it working, and I am very doubtful if he spoke to Investec about it at all. In effect, Mr Holyoake was simply pretending to go along with this proposal to obtain more time.

The next proposal was that CPC purchase GGH, something suggested by Mr Holyoake on 18 May but which he told Mr Pym and Mr Lovering he hoped he would not have to do. There was considerable negotiation of the terms for the sale, which took the form of a sale and purchase agreement (“SPA”) whereby Greenlander was to sell the shares in Hotblack to a new CPC company, GGH (Guernsey) Ltd, and for some time it looked as if the transaction would complete; on 9 June however Mr Holyoake told Mr Dean that he was expecting to refinance imminently which would enable him to repay CPC. That initially led to a proposal that the SPA be entered into but with an option for Greenlander to repurchase the Hotblack shares from GGH (Guernsey); but on 11 June it was agreed that instead the SPA would be signed but put into escrow, Mr Holyoake being given 6 weeks to repay the loan. On 14 June 2012 the parties duly signed an Escrow Deed to allow him the opportunity to do that.

Mr Holyoake’s pleaded case is that the Escrow Deed, and a series of further escrow deeds, were highly disadvantageous agreements which Mr Holyoake felt himself coerced to enter into against his will as a result of pressure, threats, intimidation and coercion and the legal proceedings that CPC brought. In closing submissions Mr Stewart submitted that the SPA was the means by which the Defendants were seeking to obtain ownership of GGH, that Mr Holyoake was able to stave off the SPA for short periods of time by putting it in escrow, that he was required to make substantial payments to prevent CPC from exercising its rights and that if Mr Holyoake was unable to repay, CPC would be able to take steps to put into effect the SPA and purchase Hotblack.

That seems to me to misunderstand the purpose and effect of the escrow deeds. I can illustrate the point by reference to the first one dated 14 June 2012. This provided as follows:

I have not understood in what way this was disadvantageous to Mr Holyoake, let alone highly disadvantageous. The practical effect was that he obtained another 6 weeks in which to complete his refinancing if he could. On the view I take of the Escrow Deed, he could not be forced to complete the SPA if he failed to refinance. The only consequence would be that he would be liable for the £17.74m. But on the findings I have made above Mr Holyoake was already bound by the Supplemental Loan Agreement. That had admitted the breaches relied on by CPC, entitled CPC to enforce its rights at any time after 28 February 2012, and amended the Loan Agreement to make it clear that on an Event of Default the whole £17.74m would be payable. CPC had indeed proceeded to enforce its rights by issuing and serving the claim form on 19 March. It seems to me to follow that Mr Holyoake was already liable to pay the £17.74m, and had been since at least 19 March, and that for the Escrow Deed to provide that in place of that liability he would be liable for a new debt of £17.74m on 4 August 2012 did not materially worsen his position. Mr Holyoake also obtained the benefit of the current proceedings being dropped, which was clearly a benefit to him, not least in not having to spend any more money on defending them.

His reaction on 11 June to Mr Wells when CPC had agreed to allow him to refinance and give him 6 weeks to do so was that it had been a very heavy day but not bad, that “above is big movement” and “from where we were today we have moved mountains” and in oral evidence he accepted that he was telling Mr Wells that CPC were seemingly giving some significant commercial ground to him. That does not suggest that he thought he had done a highly disadvantageous deal, and for the reasons I have given I do not find that he had. Indeed it is difficult to see quite what benefit CPC got from the Escrow Deed in return for giving Mr Holyoake another 6 weeks in which to attempt to raise enough money to pay them off, other than the prospect that they might indeed get paid.

A whole series of further escrow agreements followed, starting with a New Escrow and Guarantee Deed dated 31 July 2012 and continuing up to a Tenth New Escrow Deed and Guarantee Deed dated 15 October 2012. These took much the same form as the first Escrow Deed.

On each occasion Mr Holyoake was in effect seeking an extension of time to complete his refinancing. CPC was willing to grant such extensions at a price. For the first extension, granted by the New Escrow Deed of 31 July 2012 (which extended the time for repayment by 3 weeks to 23 August 2012), the price consisted of a variation to the terms of the SPA. For the subsequent extensions, CPC required Mr Holyoake to make a cash payment in part repayment of the £17.74m. Thus for example the Second New Escrow and Guarantee Deed, dated 24 August 2012, granted an extension for a further two weeks until 6 September in return for a payment of £1,250,000 made by Mr Holyoake on 22 August, the effect being to reduce the outstanding debt from the £17.74m to £16,493,578. By the time of the

These demands for cash no doubt put pressure on Mr Holyoake’s cashflow, but I do not see that he was in any sense forced into these successive agreements. He was the one who in each case wanted further time to complete his refinancing. CPC were not obliged to give him any further time and could at any stage have refused an extension and proceeded to enforce the claim for £17.74m. One can take as an example the position he found himself in as the deadline of 23 August set by the New Escrow Deed approached. If he failed to refinance and repay CPC by 6 pm on 23 August, then he would either have had to complete the SPA or the £17.74m would have become payable by 5 pm on 28 August. For reasons given below I do not think Mr Holyoake ever had any intention of completing the SPA. So the practical alternative to agreeing terms for an extension beyond 24 August was to face the prospect of crystallising the debt on 28 August and putting himself in a position where CPC could sue him for it. Given that he had agreed in the New Escrow Deed that a new debt of £17.74m would become due by 5 pm on 28 August, he would obviously be in some difficulty in defending such proceedings. No doubt Mr Holyoake wished to avoid the prospect of being sued, but for a debtor to obtain further time to pay by making partpayments of his debt does not seem to me at all out of the ordinary or highly disadvantageous to him. And although Mr Holyoake’s position was not enviable, CPC’s position was not that enviable either. In an e-mail of 27 July 2012 Mr Dean told Mr Christian Candy and Mr Smith that “He knows he has us by the balls – the joy of unsecured debt”; that reflects the fact that CPC had no security over GGH and its only real option if Mr Holyoake would not complete the SPA was to proceed with litigation. But litigation would not be guaranteed to work: Mr Dean’s evidence was that from his first involvement at the end of March 2012 onwards, there was an overriding concern that public litigation would lead to Mr Holyoake’s other creditors stepping in and Mr Holyoake’s property ventures collapsing and that there was a real danger of CPC not being able to recover. In these circumstances CPC did not hold all the cards, and I accept Mr Lord’s submission that Mr Dean’s e-mail of 27 July accurately reflects the fact that the parties’ respective commercial strategies were finely balanced.

In the same e-mail of 27 July Mr Dean referred to Mr Holyoake having given him a

“gentleman’s agreement” that if he did not refinance in two weeks he would sell CPC the property, something Mr Dean told him was worthless. In oral evidence, Mr Dean said that he was very mindful that the escrow agreement did not bind Mr Holyoake to enter into the SPA, but also hopeful as he thought Mr Holyoake did want to proceed with the SPA, and that he, perhaps foolishly, genuinely thought that the SPA they had negotiated was something that Mr Holyoake wanted to enter into. In fact I do not think Mr Holyoake would ever have completed any of the SPAs, and I accept Mr Lord’s submission that the arrangements would not have worked because of the existence of the Oscarone loan. I can take the first version of the SPA as an example. This contained as one would expect extensive warranties by Greenlander as seller of the Hotblack shares (cl 6.1), and a guarantee by Mr Holyoake of Greenlander’s obligations and liabilities, including liabilities for any breach of the warranties (cl 8.1). The warranties included a warranty that Hotblack had no borrowings or indebtedness other than the Investec loan and the loan advanced by Mr Holyoake to

Hotblack, and no liabilities other than those loans and its obligations under the leases

of GGH (sch 2 paras 3.3 and 3.4). That was of course untrue because of the Oscarone loan, and completion of the SPA would sooner or later have brought that to light and exposed Greenlander and hence Mr Holyoake to a claim under the warranties.

In the event when Mr Holyoake failed to refinance by the deadline of 16 October 2012 set by the Tenth New Escrow and Guarantee Deed, and Mr Dean asked him about completing the SPA, Mr Holyoake said that they had decided that it was inappropriate to complete the sale and put forward new proposals.

There are two specific matters relied on Mr Stewart in this period which I should deal with. The first concerns a further approach to Mr Knuckey by CPC (as already referred to (paragraph 317 above)). The facts are as follows. On 18 June 2012 Mr Christian Candy e-mailed Mr Dean and his brother to report that he was “sourcing debt collectors now as a back-up”. This was shortly after the first Escrow Deed had been entered into (on 14 June). Then on 2 July he sent them and Mr Smith a further e-mail, the subject of which was “Cliff Knuckey re Mark Holyoake post summary judgment”, reporting that he had just spoken to Mr Knuckey and that he had some people who could do debt collection at the size they were discussing. On the basis of these e-mails, Mr Stewart submitted that what Mr Candy was discussing with Mr Knuckey was not legitimate debt collection but illegitimate debt collectors.

This allegation is not pleaded; it is not suggested that Mr Holyoake knew of Mr Candy’s approach to Mr Knuckey at the time (Mr Holyoake only discovered it as a result of disclosure) and it is not suggested that anything came of it – there was no actual attempt at debt collection, legitimate or otherwise, and no suggestion that there were threats of debt collection after the call on 4 April. In those circumstances I do not think it is in fact necessary for me to make any findings about the matter one way or the other. It is certainly a bit odd that Mr Candy thought of turning to Mr Knuckey. His explanation in evidence is that he was thinking ahead, modelling ahead, as to what they would do if Mr Holyoake did not repay them – they had an unsecured debt, Mr Holyoake was in the Balearics, Hotblack in Jersey, Greenlander in the BVI, and he was thinking about how, if they got a summary judgment, they could actually recover it. He asked Mr Knuckey because he knew that he had been involved in antimoney laundering and thought he might know someone who could deal with crossborder recovery. As Mr Stewart submitted, that raises a number of questions. An ex-policeman who is in the business of private investigation might well be very helpful to trace assets, but is far from being an obvious source of advice on crossborder recovery. If Mr Candy wanted to know what the legal options for recovery were, one would have thought the first thing to have done would be to ask Wragges, a large commercial law firm. If he wanted to find someone to sell the judgment to once they had one, Mr Smith’s evidence was that he received regular inquiries from people wishing to buy debts. Moreover, Mr Knuckey had by then been arrested on serious charges, which had received a measure of publicity. Mr Candy said that he was not aware of this at the time, but Mr Smith certainly was, and one might have thought that it would be natural for Mr Candy to ask Mr Smith if it was worth talking to Mr Knuckey before doing so, both because Mr Knuckey was primarily a contact of Mr

The second specific matter that Mr Stewart relied on is also not pleaded as such. This is that the Defendants interfered with Savills in the summer of 2012 to delay Savills’ work on valuation, which hampered the Claimants’ efforts to refinance and forced them to engage JLL as alternative valuers. The facts are as follows:

That is the background to the allegation that the Defendants interfered with a valuation by Savills. Mr Holyoake was attempting to refinance. On 24 July 2012 Mr Holyoake told Mr Dean in a telephone call that the only outstanding condition precedent to the refinancing was a valuation, that Savills had delayed providing the valuation, and that he had therefore agreed with the funder to use a new valuer who would report in 10 working days from Friday 20 July (the implication being that the new valuer had only been instructed on 20 July). Mr Holyoake also alluded to the connection between Savills and CPC being the reason they had not delivered. There is in evidence an appraisal by Savills dated 14 June 2012 at a sales price of £3,000 per square foot which led to a value of some £93m, and Mr Stewart suggested to Mr Candy that he specifically did not want Savills providing a valuation in accordance with that appraisal, which he denied. Mr Dean sent Mr Holyoake an e-mail on 25 July summarising the conversation, and asking him to confirm that he had no objection to CPC speaking to Savills to establish their view of his allegation. Mr Holyoake’s response was that he did not wish to get into the Savills matter – he simply wanted to explain why there was a delay in the valuation. Further correspondence ensued in which Mr Dean made it clear that no-one at CPC had interfered with the valuation process.

On this material I do not find the allegation that CPC interfered with the Savills valuation proved. The fact that Mr Holyoake did not want to pursue it with Savills when Mr Dean offered to do so casts doubt on whether he had any real basis for making the allegation; although he continued to assert the allegation in oral evidence, he did not explain what the basis for it was; I do not regard the matters relied on by Mr Stewart as sufficient to infer that there had been such interference; nor do I accept that CPC had any real motive for doing so. The whole purpose of the repeated escrow agreements was to give Mr Holyoake the time to complete a refinancing which would enable him to pay CPC the £17.74m, and to frustrate that process would simply make it less likely that they would recover the full £17.74m.

Moreover the suggestion that Mr Holyoake had instructed JLL on 20 July in response to delays in Savills providing their valuation is demonstrably untrue. Mr Holyoake had already been in contact with JLL by 4 July, and they had been formally instructed by 6 July. When Mr Dean later asked for a copy of the valuation, Mr Holyoake told Mr Wells that the date of JLL’s letter confirming instructions on 6 July, which was included as Appendix 1 to the report, was a “big problem” and asked him to remove it or blank it, and the report was sent without appendices. It seems probable that Mr Holyoake was simply using the suggestion that Savills had delayed as a way of justifying a further extension of time for the refinancing to complete.

As already referred to, on the failure of Mr Holyoake to refinance by the deadline of 16 October 2012 in the Tenth New Escrow and Guarantee Deed, he did not complete the SPA. That meant that under its terms the balance then outstanding, being £14.65m, became due on 19 October, and Wragges sent a letter on that date to Collyer Bristow demanding payment of the £14.65m. Mr Holyoake however had put forward new proposals for staged repayments, starting with a £2m payment within 14 days of agreement, and for him to put in place a sale subject to planning or a refinancing once planning had been achieved.

Those led in due course to the parties signing an Extension Agreement, dated 26 October 2012. Its effect was to permit Mr Holyoake to pay the £14.65m by monthly instalments of £1m, in return for an Extension Fee of £3.5m payable as to £1.8m by 1 November and as to £1.7m by 30 November. If the Extension Fees were paid on time they would reduce the principal amount of the debt. Interest continued to accrue at 15% per annum from 17 October, but CPC agreed to waive it if the debt were repaid in accordance with the schedule. The parties also agreed to co-operate in good faith to complete a Joint Marketing Agreement (“JMA”) which would give Mr Holyoake 6 months to find a buyer failing which CPC could step in and direct a sale. The proposal for the JMA had been evolved by Mr Holyoake with Mr Alex O’Connor of Collyer Bristow and put forward by Mr Holyoake to Mr Dean in an e-mail of 23 October.

Mr Holyoake had told Mr Dean that the £1.8m was coming from ISI, but in the event he only paid £0.8m of the first instalment of £1.8m, which came from a refinancing of the Investec facility by Capital A (some of the Investec personnel having moved to Capital A). The effect under the terms of the Extension Agreement was (i) that the unpaid £1m of the first Extension Fee was added to the debt (ii) the total amount then outstanding was therefore increased to £14.85m (being £14.65m less £0.8m plus £1m) and (iii) the whole amount became immediately due. On 20 November 2012 CPC issued a claim form in the Chancery Division for the sum of £14.85m plus interest from 17 October 2012.

That led to the negotiation and agreement of a Second Extension Agreement dated 23 November 2012, together with a JMA, the claim being discontinued by consent. The

The JMA entered into on the same day was made between CPC, Hotblack and Mr Holyoake. It obliged Hotblack to diligently market GGH on the open market and use all reasonable endeavours to complete a sale of GGH to an arms-length third party buyer on the open market at the best price reasonably obtainable in the open market. It provided for CPC to apply to the Land Registry for a restriction to be entered against the title to GGH preventing a disposition of GGH without CPC’s consent. It also granted CPC step-in rights which took the form of an option granted by Hotblack to CPC to require Hotblack to complete a sale of GGH to a third party buyer identified by CPC, CPC being under a similar obligation to diligently market and use all reasonable endeavours to agree a sale to an arms-length third party buyer on the open market at the best price reasonably obtainable. The option was to be exercised during the Option Period; the Option Period was the period of 18 months following the Long Stop Date; and the Long Stop Date was 30 April 2013, or, if Hotblack had exchanged on a Qualifying Contract on or before 30 April 2013, 1 October 2013.

The combined effect of the Second Extension Agreement and the JMA therefore was that if Mr Holyoake found a purchaser by 30 April 2013 and Hotblack entered into a Qualifying Contract (i) Hotblack would have until 1 October 2013 to complete the sale and (ii) the balance of Mr Holyoake’s debt would not become payable until 1 October 2013; but that if Hotblack did not enter into a Qualifying Contract by 30 April 2013, the balance of the debt would become due and CPC would have the right to sell the property. The definition of Qualifying Contract was therefore important. It was defined (in the JMA) as follows:

“a contract for [Hotblack] to sell [GGH] to an arms length third party buyer (“the Buyer”) which is conditional upon satisfactory receipt of the Planning Permission and where:

a.

the purchase price to be paid by the Buyer under the contract is at least £75 million;

b.

the Buyer has provided a non-refundable deposit of at least 5% of the purchase price; and

c.

the completion date pursuant to the contract is expressed to be no later than 30

September 2013.”

Mr Holyoake made the monthly payments required under the Second Extension Agreement from December 2012 to 3 April 2013, a total of £3.25m (thereby reducing the debt to £13.6m).

On 22 April 2013 Mr Holyoake sent Mr Dean a draft contract for the sale of GGH. Mr Dean said that it would be helpful if Mr O’Connor could confirm that it was a qualifying contract, and Mr Holyoake said he would do so when all the detail was agreed, and on 25 April Mr O’Connor duly sent a letter to Wragges confirming that they had advised their client that the contract once entered into would be a Qualifying Contract. On 30 April Mr O’Connor confirmed to Wragges that he had exchanged contracts, and a contract was indeed entered into on that day between Hotblack and Sherbourne; on 2 May Mr O’Connor e-mailed Wragges confirming that in his view the contract was a Qualifying Contract as defined in the JMA, although he had agreed with Wragges that the confirmation was given on the basis that no reliance could be placed on it and without any liability for him or Collyer Bristow.

In fact it is clear that the contract was not a Qualifying Contract. It is not in dispute that at the time it was entered into Sherbourne was wholly owned by Mr Lovering, and both Mr Holyoake and Mr Lovering accepted in oral evidence that Sherbourne did not qualify as an arm’s length third party purchaser, and that they had misled CPC.

Moreover, the contract, which was for a sale at £79m, provided for a deposit to be paid as follows: £50,000 on the date of the contract, a further £200,000 within 7 working days, and a further payment to bring the deposit up to 5% within 6 weeks after planning. Mr O’Connor in oral evidence suggested that the definition of Qualifying Contract was ambiguous and could be read as meaning that a contract was a Qualifying Contract if it was one whereby or whereunder a 5% deposit was payable,

As I have said Mr Holyoake and Mr Lovering both accepted that it was misleading to tell CPC that the contract was a Qualifying Contract. It was in fact a brazen and elaborate deception. It started with Mr Lovering instructing a firm of solicitors, HowardKennedyFsi (“HKfsi”), and Collyer Bristow and HKfsi, both of whom thought they were acting for independent parties, then negotiating the contracts, while Mr Lovering and Mr Holyoake were exchanging e-mails discussing what to say to their respective solicitors to keep up the pretence of negotiation. Mr O’Connor said in oral evidence that he asked Mr Holyoake if the purchaser was an arm’s length third party, and he said that it was; I accept this evidence which means Mr Holyoake had on this point deceived his own solicitor.

Mr Dean remained suspicious despite Mr O’Connor’s confirmation and asked for Wragges to review the contract. Mr Holyoake prevaricated, citing confidentiality reasons (although Wragges had seen a draft, and Mr Dean made it clear that CPC were not interested in the identity of the buyer) and then offering to provide a QC’s opinion (which was never provided, no doubt because it proved impossible to obtain an unequivocal opinion); eventually on 16 May 2013 Wragges were allowed to inspect a copy of the contract. Wragges advised CPC that it was not a Qualifying Contract because of the deposit provisions, and on 17 May Mr Dean spoke to Mr Holyoake and told him that Mr Christian Candy was concerned that the low deposit must mean the buyer was not real and asked for the name of the buyer so CPC could get comfortable, the call being followed by a formal letter from Wragges to the same effect, requiring concrete and corroborated evidence that the buyer was a bona fide arm’s length buyer. Mr Holyoake did not provide this and on 20 May CPC issued its third claim, in the Chancery Division, asserting that the contract was not a Qualifying Contract and claiming the outstanding sum of £13.6m.

On 21 May Mr Holyoake e-mailed Mr Dean saying that the buyer was the Al-Rajhi group. That was untrue and misleading, as Mr Holyoake accepted in evidence. But it was sufficient to persuade CPC to discontinue the claim which it did on 29 May.

The deception that there was a genuine arm’s length buyer continued all the way through to September 2013. Mr Holyoake in evidence sought to justify it by saying that he was trying to buy time to get through planning and receive the value uplift that that would bring, as otherwise CPC could step in and sell the property which would mean that he might be left with nothing. Mr Stewart submitted that the deception was justifiable in the circumstances. That is not a view that I can take: having agreed to a contract under which CPC could sell the property unless a Qualifying Contract had been entered into, it cannot be a justification for resorting to deception that if CPC did step in and sell the property as they were contractually entitled to do, the consequences would be unattractive to Mr Holyoake.

On 3 July 2013 Westminster City Council granted planning permission for the development of GGH to provide 42 residential units on the first to seventh floors. There was a six week period for judicial review which expired on 14 August 2013 with no judicial reviews having been brought. Completion of the contract with Sherbourne was due on 22 August. But on 21 August Mr Holyoake revealed that he was working on a Plan B which involved a refinancing instead of a sale. He was still however suggesting that the sale might go ahead and confirmed in an e-mail to Mr Dean that the buyer was totally third party and nothing to do with him in any shape or form.

By this stage Mr Holyoake had referred to a possible claim under the CCA. This had first been referred to on a telephone call he had with Mr Dean on 18 August. On 19 August Wragges wrote to Collyer Bristow threatening proceedings if completion did not take place on 22 August; on 22 August Collyer Bristow wrote to Wragges saying that if proceedings were brought, there would be a counterclaim under the CCA, and making an offer to settle CPC’s claims for some £13.7m and a further £5m payable within 12 months.

That led to a call between Mr Dean and Mr Holyoake. Mr Holyoake’s pleaded case is that the call took place on 23 August, although the contemporary e-mails make it probable (as Mr Stewart accepted) that it was in fact on the evening of 22 August. Mr Holyoake’s pleaded case is that Mr Dean told him that even if his CCA position was correct, it would make no difference as Mr Holyoake had a choice either to accept a complete “cleansing” such that he would be unable to sue CPC and Mr Christian Candy or they would take GGH and “ruin” him. Mr Dean accepted that there was some reference to “cleansing” on the call, and that it might have been by him; he said that in this context all it meant was making a clean start, that is by entering into an agreement whereby any potential claims on both sides would be surrendered. He denied saying that the alternative was that CPC would “ruin” him, but accepted in his witness statement that if Mr Holyoake declined to enter into such an agreement then the only alternative would be litigation. There was little further exploration of the point in oral evidence, and I am left unsure quite what was said. I am not persuaded that Mr Dean referred to ruining Mr Holyoake, although he no doubt did make it clear that the alternative to an agreement which involved dropping the CCA claims would be litigation. Since Mr Holyoake had consistently taken the view that litigation would be disastrous, he no doubt did regard this as a threat to ruin him, but it does not follow that Mr Dean used the word. In any event although Mr Stewart asked me to find that this was an example of economic duress, I find that for Mr Dean to state that unless

On 30 August 2013 Mr Holyoake was still pretending that there was a purchaser who was due to complete but said that the buyer’s concerns were “restriction release delays”, suggesting therefore that this was CPC’s fault in delaying the removal of the restriction which it had entered against the title. That led to a letter before action from Wragges on 2 September denying that CPC had caused any delay (Wragges being willing to give an undertaking to lift the restriction once Mr Holyoake had agreed the figure payable to CPC), and threatening proceedings unless CPC were repaid that day. On 3 September CPC duly issued its fourth claim, again in the Chancery Division, claiming £13.3m and interest, on the basis that the Sherbourne contract was not a Qualifying Contract, or alternatively that if it was, instalments due under the Second Extension Agreement had not been paid (the £13.3m was the amount of £13.6m due under the Second Extension Agreement less two payments of £100,000 and £200,000 made in August).

Mr Holyoake continued to try and negotiate terms under which CPC would allow the property to be refinanced rather than sold, and eventually on 4 September told Mr Dean that the sale was not a viable option. Mr Dean said that CPC wanted to speak to the proposed lender for the refinancing. Mr Holyoake gave him the name of the lender, which was Arlington, and arranged for him to speak to a representative from Arlington the next day. In fact, he got Mr Lovering to pretend to be a representative from Arlington, and Mr Dean spoke to him.

There was then a meeting on 6 September at the Bulgari Hotel in London attended by

These are pleaded as further threats to Mr Holyoake, but I see nothing surprising, or unlawful, about CPC being unwilling to proceed with the refinancing except on terms that allegations were dropped. Under the JMA, which still governed the parties’ relations, CPC had the right both to immediate payment of the outstanding debt and to step in and sell the property (at the latest, even if the Sherbourne contract had been a Qualifying Contract, in October). The threat to do so if a settlement could not be agreed was no doubt a potent one, but I do not see that it was unlawful.

There was also discussion at the meeting about CPC’s restriction on title. In the event the Arlington refinance did not proceed, and Mr Holyoake complained that this was because CPC insisted that they retain their restriction over GGH. This is not a specifically pleaded allegation but in closing Mr Stewart submitted that this was an example of CPC interfering with Mr Holyoake’s attempts to refinance, which imposed extra costs on him, and I will deal with it.

Collyer Bristow had proposed protection for CPC on the register of title when the JMA proposal was first floated on 23 October 2012, albeit at that stage it took the form of CPC being entitled to register a unilateral notice against the title to GGH, with the JMA containing a prohibition against disposal without CPC’s consent. By the time of the Extension Agreement on 26 October 2012, the parties had agreed indicative terms for the JMA which were set out in schedule 1 to the Extension Agreement, and these included (at para 9) an agreement that CPC would be protected by a restriction on title preventing any disposal of GGH without CPC’s consent.

This duly found its way into the JMA executed on 23 November 2012 as cl 4: by cl 4.1 CPC was to apply to the Land Registry to register a restriction preventing a disposition being registered without CPC’s consent; and by cl 4.5, CPC covenanted to release the restriction on the sums referred to in cll 3.1, 3.2 and 3.3 being paid in full. These clauses referred respectively to the proceeds of sale being used to pay (1) the senior lender (Capital A), (2) CPC in respect of the debt and (3) CPC in respect of the sums to which it was entitled under the Declarations of Trust. Since the JMA was designed to lead to a sale, either by Mr Holyoake, or in default by CPC, and since a sale of GGH would trigger the liability under the Hotblack Declaration of Trust, that no doubt made sense. The practical effect however was to give CPC a considerable degree of comfort in relation to the £10m minimum due under the Declaration of Trust. The restriction did not give them formal security as such, but the ability to block a disposition unless all sums were duly paid undoubtedly gave them a significant protection – Mr Dean referred to it in oral evidence as a “passive security” that was “potent” and “had teeth”.

On a refinancing however the payments under the Declarations of Trust would not be immediately payable but would await a future sale. Mr Holyoake wanted the restriction lifted and replaced with his personal guarantee for the future sums due under the Declarations of Trust. CPC made it clear that they were not interested in his personal guarantee. That was the background to the discussion at the Bulgari Hotel meeting. Mr Dean’s evidence was that at the meeting it was agreed that CPC’s restriction be lifted to allow the refinancing to take place and then put back on to protect CPC’s remaining interests. That appears to be borne out by the e-mails: on 9 September Mr Dean told Mr Holyoake that Wragges had given advice as to how the restriction could be “removed and replaced seamlessly”, to the effect that they would need to speak to the lender’s solicitor. Mr Holyoake resisted this suggesting that the lender would not agree, and proposing instead that he agree to put the restriction back on without telling the lender; but by 17 September Mr Holyoake was telling Mr Pym and Mr Lovering that support had been secured from Tuvi (a reference to Mr Tuvi Keinan, Arlington’s solicitor) for the restriction, and at that stage completion of the refinancing seemed imminent.

In the event the Arlington refinance did not collapse until much later. Mr CoplestoneCrow, a solicitor at The Wilkes Partnership LLP, acted for Hotblack on the proposed refinance. He gave evidence that negotiations continued through October 2013, and that the form of documentation was basically agreed by the end of October. He did not know why after such difficult negotiations and drafting, having agreed the paperwork, engrossments were never issued; and in oral evidence confirmed that his role was to negotiate the documentation for the release of the existing restriction and the imposition of a new restriction which ranked behind that of Arlington. He was not however privy to commercial negotiations between the parties; and accepted that he did not see e-mails from 29 October which appeared to show that there were commercial issues still being debated. The precise issue which caused the negotiations to collapse was not explored in any detail in the evidence, but I was shown nothing which suggests that the problem in the end was anything to do with CPC retaining a restriction. Instead it appears (although I was not I think addressed on any of this) that Arlington was proposing to lend a total of some £53m (enough to repay not only Capital A and CPC but also Oscarone), but that CPC thought they were going to lend no more than £40m. When CPC discovered the true position, Mr Dean concluded that not only did that weaken CPC’s position by pushing them significantly higher up the capital stack, but that Arlington had been “greedy at the very last minute”, had been “playing games”, “mischievous” and “underhand”, and CPC decided they were not prepared to sit behind them following their actions. I have a strong suspicion that Arlington were not to blame in this but that the real cause of the problem was that Mr Holyoake had been intending to borrow £53m from Arlington but had told CPC he was only borrowing £40m; but it is unnecessary to make any findings to this effect. It is sufficient to say that I find that it was not CPC’s insistence on retaining its restriction which caused the refinancing with Arlington to fail.

Returning to the Bulgari Hotel meeting on 6 September, Mr Dean described the meeting that evening as having gone well and the next day e-mailed Mr Holyoake to the effect that they had arrived at a pretty clear way forward, later describing it to Mr

In due course that led to three agreements being executed on 15 October 2013. One was the Settlement Deed. I will have to consider its provisions in more detail below, but in essence it provided for a full and final settlement of any claims which Mr Holyoake or Hotblack had or might have against CPC and its directors (and their relatives, thereby extending to Mr Nicholas Candy) and vice-versa; it also provided for the parties to release to each other a further extension agreement (the Second Supplemental Extension Agreement) and a further JMA (the Second JMA); and for

The second agreement executed was the Second Supplemental Extension Agreement. This extended time for repayment until 24 January 2014 (or earlier sale). In return Mr Holyoake agreed to pay an Extension Fee of £2m which was added to the debt, which therefore consisted of (a) the principal sum of £13.3m outstanding under the Second Extension Agreement; (b) interest thereon pursuant to the terms of the Second Extension Agreement; and (c) the Extension Fee of £2m. He also agreed to make interim repayments of £500,000 by 4 November 2013 and £4.5m by 9 December 2013. Interest was to accrue from 18 October 2013 at the rate of 15% per annum.

The third agreement entered into on 15 October 2013 was the Second JMA. This followed the same format as the first JMA but gave Mr Holyoake until 24 January 2014 to sell GGH, with CPC then having step-in rights.

Both agreements were to enter into effect on 18 October 2013, but would not take effect if Mr Holyoake had repaid £10.3m and entered into a Third Extension Agreement instead. This was to give Mr Holyoake the opportunity to complete the refinancing with Arlington, which, as already referred to, did not in fact happen.

There followed a series of further extension agreements, each accompanied by a further JMA. They followed a pattern: in each case, Mr Holyoake defaulted in making one of the interim repayments stipulated in the then current agreement, thereby making the entire debt due; CPC agreed a further extension, usually in return for a fee; the debt was restated to include interest accrued under the previous agreements; and Mr Holyoake agreed to make new interim repayments. When he defaulted on those, the process was repeated.

Thus Mr Holyoake did not pay the £500,000 interim repayment due on 4 November 2013. On 8 November 2013 the parties entered into a Third Supplemental Extension Agreement (and Third JMA). This extended the time to 31 January 2014 if Hotblack had entered into a contract to sell GGH by 20 December 2013, but otherwise only until 21 December 2013. No extension fee was charged, but the debt was restated as (a) £15.3m (being the £13.3m under the Second Supplemental Extension Agreement plus the £2m Extension Fee under that agreement); (b) interest due under the Second Extension Agreement; and (c) interest due under the Second Supplemental Extension Agreement. Mr Holyoake agreed to repay £250,000 by 29 November 2013 and £750,000 by 20 December 2013. Under cl 4.2 interest again accrued on the total from the date of the agreement at 15% per annum.

Mr Holyoake paid the £250,000 due on 29 November 2013, but not the £750,000 due on 20 December 2013. On 20 December 2013 the parties entered into a Fourth Supplemental Extension Agreement (and Fourth JMA). This provided for the debt to be repaid on 20 January 2014 in return for an Extension Fee of £1m, which was added to the debt. The debt was restated as £17,428,411 made up of (a) the £15.3m; (b)interest accrued under the Second Extension Agreement of £970,299; (c) interest accrued under the Second Supplemental Extension Agreement of £127,042;

Mr Holyoake paid only £333,000 of the £750,000 due on 10 January 2014. On 15 January 2014 a Final Supplemental Extension Agreement was entered into (and Final JMA). This extended time to 22 January 2014 unless Hotblack had entered into a contract for the sale of GGH by then in which case it was extended to 14 February 2014. An Extension Fee of £1.5m was charged which was added to the debt. The debt was restated at £18,780,948 being the £17,428,411 due under the Fourth Supplemental Extension Agreement, interest under that agreement of £185,537, and the Extension Fee of £1.5m less the interim repayment of £333,000. No interim repayments were required but interest again accrued due at 15% per annum from the date of the agreement.

On 16 January 2014 Hotblack entered into a contract to sell GGH to Key Platinum

As well as the senior loan, Oscarone and CPC, Mr Holyoake, with the assistance of Mr Pym and Mr Lovering, had borrowed money for the project from a large number of small investors (referred to by Mr Holyoake as “friends and family”). A spreadsheet prepared by Mr Wells in November 2013 lists these loans as they then stood. This indicates that a total of over £13.8m had by then been raised by way of loan notes, some as recently as November 2013, and examples of loan notes in evidence show that these were unsecured loans made to Dorry. There was evidence that Mr Holyoake, Mr Pym and Mr Lovering had raised monies from these small investors by continuing to sell the project as a good investment when they knew it was not. Thus on 30 August 2013 Mr Lovering e-mailed Mr Pym and Mr Holyoake referring to having been “going round with the same group of friends lying to them now for too long”; on 31 October 2013 in another e-mail he referred to the small investors disparagingly as “rats and mice” and said that his moral compass was

“stretched beyond anywhere I can comprehend” and that “looking friends in the face brings on a shoe stare”; and on 29 December 2013 when Mr Holyoake was encouraging Mr Pym to “sell it as a real positive”, Mr Pym replied “Will try, just struggle with the constant lying”. Mr Holyoake accepted in evidence that he probably had lied to third parties; Mr Pym said he realised it was all going horribly wrong from March 2012 but was still telling people it was a fantastic transaction when from his standpoint it obviously wasn’t; and Mr Lovering in an e-mail of 30 December 2013 confessed that he was worried “about the fraud we have committed”. He attempted to explain this in oral evidence as being a reference to a fraud committed by the Candys, but this evidence was frankly incoherent and I infer that he was referring to the way he and Mr Pym had continued to raise money from investors by selling GGH as a wonderful investment when they knew it was not.

These loans carried varying rates of interest and the total shown as repayable on Mr Wells’ spreadsheet, assuming a repayment in December 2013, was over £17.3m. Mr Holyoake accepted in evidence that although some of this was repaid out of the proceeds of sale, not all of it was. His estimate was that about £7m or £8m had not been repaid, but Mr Wells said that it was more like £10m. I was not given any detail of how Mr Holyoake decided who should be repaid and who should not. At one point (on 28 February 2013) Mr Pym e-mailed Mr Holyoake to the effect that he needed to sort out some of the “smaller, painful ones” if possible, and that they also needed to work out what to do with the ones he and Mr Holyoake had a personal guarantee on; but Mr Holyoake said that although it was a consideration it didn’t actually happen that way in the end, although he did not explain what did.

Not all the money that Mr Holyoake received was however used to repay these investors. Mr Holyoake appears to have paid the final instalment on his ISI shares by 10 March 2014, that is shortly after completion, and he was unclear in oral evidence whether he used the money from GGH to pay for it or not – it seems likely that he did, although I do not make any positive finding to that effect. What does seem clear however, as accepted by Mr Wells, is that £500,000 of the proceeds of sale was used to make a new investment in a mining company, Kincora Copper Ltd; Mr Lovering said that that was Mr Holyoake’s decision and a matter for him. I have not understood on what basis he felt entitled in the circumstances to do that rather than repay other investors, but he was not specifically asked that question and I have therefore not heard whether he has any explanation.

Even before completion, Mr Holyoake had attempted to engage Mr Nicholas Candy or his brother in dialogue with a view to reducing the amount he had to pay CPC. The Candys declined to speak to him, but after completion a meeting was set up for 26 February at C&C’s offices in Rutland Gardens. Mr Holyoake attended as did both Messrs Candy and Mr Dean. Mr Holyoake had told Mr Dean beforehand that the primary focus of the meeting was to repair his former friendship with Mr Nicholas Candy, but at the meeting he argued for a repayment. Mr Holyoake makes a number of allegations as to what Mr Christian Candy said to him: that he was never going to pay him “a fucking penny back” and that if Mr Holyoake sued he would make sure he was put in a “deep dark hole”. It is clear that the meeting was not an amicable occasion: Mr Dean who made a note of the meeting that evening described the parties as “robust” and the meeting as having become “somewhat heated”. Mr Candy did not dispute that he said Mr Holyoake would not get a penny back, or that he used expletives: he did not accept having made the “deep dark hole” remark, but he did accept that he told Mr Holyoake to “fuck off and die”, something that Mr Dean also remembered. I do not think I need to resolve whether the “deep dark hole” remark

Mr Holyoake also met Mr Nicholas Candy at the Bulgari Hotel on 27 March 2014. That did not produce any resolution either, and after CPC had rejected Mr Holyoake’s suggestion of arbitration, the draft proceedings were sent by Jones Day in December 2014 and these proceedings followed in August 2015.

I can now deal with the pleaded claims. I have already in effect considered a fair number of them but it is convenient to pull them all together here, and deal with any legal points that require to be resolved.

Logically there is something to be said for considering first whether the Settlement Deed is binding on Mr Holyoake, because Mr Stewart accepted that unless this can be set aside the claims in this action cannot succeed (save insofar as any arose after the date of the Settlement Deed). But I find it more convenient in fact to deal with the claims in the order in which they are pleaded before considering the Settlement Deed.

This is the allegation that Mr Williams told Mr Holyoake on the evening of 12 October 2011 that the net asset statement was being sought purely as a formality and would never be relied on. I have considered this allegation at length above (paragraphs 135-141). I am not persuaded that Mr Williams made the representation alleged and this claim fails.

This refers to the lies that Mr Candy told Mr Holyoake about having to disclose CPC’s net asset statement to Investec. I have considered the primary facts at length above (paragraphs 170-174), and have concluded that Mr Candy did indeed tell a series of deliberate lies. On the other hand, Mr Holyoake did not believe him and was not in any sense deceived by them (paragraph 175 above).

Mr Holyoake’s pleaded case is that if it had not been for Mr Candy’s lies, Mr Holyoake would not have entered into the Supplemental Loan Agreement, that his consent to the Supplemental Loan Agreement was vitiated and that he is therefore entitled to rescind it; he also claims to have suffered loss and damage by reason of the lies.

On the face of it, the fact that Mr Holyoake was not for one moment taken in by Mr

Mr Stewart however submitted that that was not a complete answer. He referred me to the Supreme Court decision in Hayward v Zurich Insurance Co plc [2016] UKSC 48. In that case Zurich had settled Mr Hayward’s claim for personal injuries despite being very sceptical as to whether his injuries were as extensive as he claimed. When they later received evidence that he had grossly and dishonestly exaggerated his claim, they sought to set aside the settlement. The Supreme Court held that they were entitled to, on the basis that it was not necessary for Zurich to prove that it believed the representation to be true. It was sufficient to show that they were induced to settle as they did because of Mr Hayward’s lies, and the question whether they were so induced was a question of fact, not a question of law.

I of course accept that as a correct statement of the law. But it does not detract from the fact that in the paradigm case where A lies to B in the hope of inducing B to do something, B will in fact usually only be induced to do so if he believes A’s lie. Indeed Lord Clarke himself says at [18] that if the representee does not believe that the representation is true:

“he may have serious difficulty in establishing that he was induced to enter into the contract or that he has suffered loss as a result”

and referred to the point made “clearly and accurately” in the “admirable” judgment of the trial judge (HHJ Moloney QC), namely:

“In the ordinary case, sale of goods for example, reliance by the purchaser is effectively equivalent to his belief in the truth of the statement; if he believes the goods are as represented, he will be relying on the representation (and acting on it by his purchase) and if not, not.”

There were two reasons why the Zurich case was not a paradigm case like that. One was that however strong Zurich’s suspicions were that Mr Hayward was lying, they did not know that he was: see per Lord Clarke at [40] where he accepts the submission that a qualified belief or disbelief does not rule out inducement, and that Zurich only knew the true position when Mr Hayward’s neighbours came forward, so that:

“As Mr Hayward knew, Zurich was settling on a false basis.”

Indeed Zurich accepted in its written case that had it known the true position, it would not have been able to rescind: see sub-paragraph (vi) of the summary of its argument set out at [28] and also [43].

The other is that the distinctive feature of the case was that the claims put forward by Mr Hayward were not just lies told to Zurich; they were also lies told to the Court. However much Zurich did or did not doubt what he was saying, the effect of that was that they ran the risk that Mr Hayward’s claim would be accepted by the Court. This

That seems to me a very different type of case from the present. What caused Zurich to settle the claim was not its own belief in the truth or otherwise of the fraudulent claim but the effect that the fraudulent claim might have on a third party (namely the Court); in other words it was a case where A lies to B and B is induced to act in a particular way because of the risk that A might tell the same lie to C and the effect that that might have on C. It is difficult to see that that principle can have any application where there is no third party or C involved. Where all that happens, as in the present case, is that A tells a lie to B, it is difficult to envisage the circumstances in which that can induce B to act in a particular way unless B is taken in and believes that what A says is true, or at least might be true. In the present case Mr Candy told Mr Holyoake that CPC were doing a deal with Investec and would need to disclose the £12m loan to Investec; he was obviously not going to tell the same lies to Investec, and it is difficult if not impossible to see how those lies could have induced Mr Holyoake to do anything in circumstances where he knew that they were lies.

Mr Stewart submitted that Mr Candy’s statements were fraudulent misrepresentations and that “they (that is, the threat that [Mr Candy] might do as he represented)” induced Mr Holyoake to seek to pay off the loan as soon as he could, and to enter into the Supplemental Loan Agreement. But as this formulation shows, what Mr Stewart was really relying on was not the lies, but the threat to go to Investec. As I have already said (paragraph 238 above), the fact that Mr Candy was prepared to make these threats made Mr Holyoake realise that CPC were not his friends, and as a result he decided to try and repay them; and no doubt the fact that Mr Candy was prepared to resort to lies to seek to justify the threats reinforced the point. The suggestion of early repayment was raised at the dinner at Le Petit Bistro on 1 December 2011 and Mr Holyoake had agreed to do so by 13 December (paragraph 191 above). But I do not see that this caused Mr Holyoake any quantifiable loss: he did not in fact repay by the end of January, nor indeed in the event did he repay anything until August 2012 by which time the whole sum was due under the terms of the Supplemental Loan Agreement in any event.

The real question therefore is whether the lies induced him to enter into the Supplemental Loan Agreement. I find that they did not: see paragraph 238 above where I concluded that the threat to go to Investec did not play any continuing part in Mr Holyoake’s decision to enter into the Supplemental Loan Agreement. The fact that the threat was accompanied by lies which Mr Holyoake never believed cannot make any difference. He was not in my judgment induced to enter into the Supplemental Loan Agreement by the lies told on 8 November.

The next pleaded claim is duress at common law. There was no dispute as to the legal principles. Duress is the obtaining of agreement or consent by illegitimate means, and an agreement entered into as a result of duress is not valid as a matter of law: Borrelli v Ting [2010] UKPC 21 at [34] per Lord Saville.

Duress can take two forms: duress to the person and economic duress. Duress to the person is where a threat of physical violence is directed against the claimant or a close relation or associate of the claimant. In the present case two specific threats to the person are relied on: what was said by Mr Christian Candy about Mrs Holyoake at the meeting in Guernsey on 6 February 2012, and what was alleged to have been said by Mr Nicholas Candy on the telephone call of 4 April 2012. I have found that the first did not amount to a threat of violence or constitute duress to the person (paragraph 233 above); and that the second allegation is not established (paragraphs 321-322 above). Apart from these two specific matters, I do not think that any of the other matters relied on, such as threats to ruin Mr Holyoake’s life, to take a wrecking ball to his assets, and to leave him with nothing, can be equated with physical threats (see paragraph 233 above). I find that none of the agreements entered into by Mr Holyoake are voidable for physical duress.

The recognition of economic duress began in 1976 with Occidental Worldwide Investment Corp v Skibs A/s Avanti [1976] 1 Ll Rep 293, and was accepted by the Privy Council in Pau On v Liu Yiu Long [1980] AC 614, and by the House of Lords in Universe Tankships Inc of Monrovia v ITWF [1983] AC 366; in Dimskal Shipping Co SA v ITWF [1992] AC 152 Lord Goff said (at 165G) that it was:

“now accepted that economic pressure may be sufficient to amount to duress for this purpose [that of entitling a party to avoid a contract on the ground of duress], provided at least that the economic pressure may be characterised as illegitimate and has constituted a significant cause inducing the plaintiff to enter into the relevant contract.”

In DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] 1 Ll Rep 530 Dyson J summarised the law as follows:

“The ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract: see Univers[e] Tank[ships] of Monrovia v ITWF [1983] AC 336, 400B–E, and The Evia Luck [1992] 2 AC 152, 165G. In determining whether there has been illegitimate pressure, the court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time; and whether he affirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.”

The essential question in the present case is whether the pressure exerted by CPC was illegitimate. In CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 AER 714 the defendants had threatened to refuse the plaintiffs credit on future dealings. They were entitled to refuse to deal with the plaintiffs at all, and a fortiori entitled to insist on no longer granting credit (see at 718a-b). Steyn LJ accepted that the fact that the defendants had used lawful means did not by itself remove the case from the scope of the doctrine of economic duress (see at 718e). But he said that in a purely commercial context it might be a relatively rare case in which “lawful act duress” could be established; and that it might be particularly difficult to establish duress if the defendant bona fide considered that his demand would be valid, although “I deliberately refrain from saying never”. Farquharson LJ and Sir Donald Nicholls VC agreed, although the latter made it clear that he did not think very much of the defendant’s conduct. Mr Lord told me that there had been no reported case in the 23 years since that decision in which lawful act duress had been established in a commercial context.

I have already considered the question of illegitimate pressure in the context of whether the Supplemental Loan Agreement was voidable for economic duress: see at paragraph 236 above where I said that the essential question was whether CPC was justified in threatening litigation if Mr Holyoake did not agree to sign the Supplemental Loan Agreement, and concluded that it was.

The same applies to the subsequent agreements. They can be taken in turn:

In these circumstances I find that none of the agreements entered into by Mr Holyoake are voidable for economic duress. The reality is that once he had signed the Loan Agreement, with its requirement for minimum net assets of £120m, he was always at risk of CPC taking a tough line and calling an event of default and hence he was always vulnerable to being sued, and very much more so after granting the Aeriance charges. It was that threat of litigation which I have found was the effective cause of his agreeing to the terms of the Supplemental Loan Agreement, and it remained that threat which at every stage persuaded him to agree to the terms required by CPC for the successive extensions of time and other agreements that he wanted.

Mr Stewart also submitted that damages could be recovered for duress: see the discussion of the point in Chitty on Contracts (32^nd edn, 2015) at §8-056. The point does not arise on my findings in the present case, and since it appears to be a controversial one and is said to be one of some potential importance, I prefer not to deal with it but to leave it for a case where it has to be resolved. In practical terms, most if not all cases of duress will also amount to the tort of intimidation (considered below), and if the claimant has suffered damage, the claimant will be able to recover damages for that tort, and the question whether damages can be recovered for duress

The next pleaded claim is that the same threats, intimidation and coercion as are relied on as constituting duress also constituted actual undue influence in equity. At first sight this is slightly surprising. The doctrine of undue influence is one of the doctrines developed by equity to protect the vulnerable and weak, and as the word “influence” suggests, the paradigm cases are cases where one party to a transaction has acquired a position of influence or ascendancy over another. Many of the cases are therefore concerned with a relationship where A reposes trust or confidence in B, and B abuses that relationship: indeed Chitty at §8-057 introduces the doctrine as one that covers:

“cases in which a transaction between two parties who are in a relationship of trust and confidence may be set aside if the transaction is the result of an abuse of the relationship.”

That seems a long way from the present case where the relationship between Mr Holyoake and CPC was the very opposite of one of trust and confidence.

Nevertheless I accept that the doctrine is not confined to what might be called abuse of relationship cases. The leading case on the doctrine of undue influence is that of the House of Lords in Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44. At [7] Lord Nicholls said that the law would not permit a transaction to stand if the means used to persuade a person to enter into it were unacceptable; that the means used were regarded as an exercise of improper or “undue” influence and hence unacceptable whenever the consent thus procured ought not fairly to be treated as the expression of a free person’s will; and that it was impossible to be more precise or definitive as the circumstances in which one person acquired influence over another, and the manner in which influence might be exercised, varied too widely to permit of any more specific criterion. At [8] he continued:

“Equity identified broadly two forms of unacceptable conduct. The first comprises overt acts of improper pressure or coercion such as unlawful threats. Today there is much overlap with the principle of duress as this principle has subsequently developed. The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.”

That makes it clear that a case of threats and improper pressure can be within the doctrine. See also the discussion by Lord Hobhouse at [103] where he refers to the division between actual and presumed undue influence, and continues:

“Actual undue influence presents no relevant problem. It is an equitable wrong committed by the dominant party against the other which makes it unconscionable for the dominant party to enforce his legal rights against the other. It is typically some express conduct overbearing the other party's will. It is capable of including conduct which might give a defence at law, for example, duress and misrepresentation… Actual undue influence does not depend upon some preexisting relationship between the two parties though it is most commonly associated with and derives from such a relationship. He who alleges actual undue influence must prove it.”

That too makes it clear that actual undue influence need not consist of abuse of an existing relationship, although it commonly does. See too the valuable discussion of the law of undue influence in the recent judgment of Rose J in Libyan Investment Authority v Goldman Sachs [2016] EWHC 2530 (Ch) at [136]-[137] where she again makes the point that cases of actual undue influence can be divided into those where there is what she calls a “protected relationship”, and those where there has been an improper threat of some kind (or arguably an improper inducement); for this latter kind of actual undue influence there is no need to establish any particular relationship between the parties.

In the present case it is not suggested that the relationship between CPC and Mr Holyoake was either such as to give rise to a presumption of undue influence or was a protected relationship of the kind referred to by Rose J. The case is solely put as one of actual threats, menaces and coercion. As appears from the citations from both Lord Nicholls and Lord Hobhouse in Etridge, there is in such a case a considerable overlap with the common law doctrine of duress, and indeed Chitty at §8-067 suggests these cases are now probably better viewed as cases of illegitimate pressure (covered by the doctrine of duress).

In these circumstances it is not clear to me what, if anything, the plea of actual undue influence adds to the plea of duress, or how it could succeed if, as I have held, the plea of duress fails on the facts. Mr Stewart submitted that one practical difference was that it was not necessary to establish that the claimant would not have entered the impugned transaction but for the undue influence, citing UCB Corporate Services Ltd v Williams [2002] EWCA Civ 555. Mr Lord countered that the UCB case was a case where there had been an actual fraudulent misrepresentation and the basis of the decision was that actual undue influence is a species of fraud (see at [86]) and that in cases of fraud, the claimant need only show that the representation was a factor in his decision to act in a particular way; not all cases of undue influence can however be equated with fraud: see the analysis in Snell’s Equity (33^rd edn, 2016) at §8-020.

I do not propose to resolve this question, which raises quite recondite issues. One does not need to get into questions of causation. I have found that the substantive threat that caused Mr Holyoake to enter into the Supplemental Loan Agreement and the series of subsequent agreements was the threat by CPC to litigate. If, as I have held, that was not illegitimate pressure for the purposes of the law of duress, it was in my judgment equally not undue influence for the purposes of the equitable doctrine. I hold that none of the agreements were voidable for actual undue influence.

The next pleaded claim is for intimidation. Intimidation is a tort and Mr Holyoake and Hotblack seek to recover damages. The facts relied on are the same threats as are relied on in support of the duress and undue influence claims.

The essential ingredients of the tort of intimidation were expressed by the Court of Appeal in Berezovsky v Abramovich [2011] EWCA Civ 153 at [5] as follows:

“(1)

a threat by the defendant to do something unlawful or “illegitimate”; (2) the threat must be intended to coerce the claimant to take or refrain from taking some course of action; (3) the threat must in fact coerce the claimant to take such action;

(4)

loss or damage must be incurred by the claimant as a result.”

For the same reasons as I have already given when discussing duress, I find that the threats made by CPC, effectively a threat to pursue Mr Holyoake by litigation, were not illegitimate. CPC did make two threats which I have held to be unjustified: the threat on 8 November 2011 to reveal the loan to Investec, and the threat in Wragges’ letter of 2 February 2012 to advertise a statutory demand. But neither in my judgment had any substantive consequences. The threat to go to Investec did not cause Mr Holyoake to do anything (other than promise to repay the loan early); the threat of advertising a statutory demand was not the effective cause of Mr Holyoake signing up to the Supplemental Loan Agreement. That means that this claim is not made out.

Mr Stewart submitted that an illegitimate threat can consist of a threat to pursue vexatious litigation: see Global Asset Capital Inc v Aabar Block SARL [2016] EWHC 298 (Comm) at [181]-[195] where Walker J was concerned with whether a proposed amendment to a pleading was sufficient to allege the ingredients of the tort of intimidation. The proposed amendment alleged that litigation had been threatened when the person threatening the proceedings had known the litigation to be groundless. Walker J held that that was a sufficient plea of unlawful conduct as the bringing of litigation in those circumstances would be an abuse of process (see at [181]-[182]). That was not disputed before him but I have no difficulty with it: it is well established that it is an abuse of process for a claimant to issue proceedings where he knows of no facts to support the claim, and it must be even more abusive to bring litigation which is actually known to be groundless. But that has no bearing on the present case: at all times from when litigation was first threatened CPC did have a bona fide belief that it was entitled to bring a claim (and in fact given my findings it did have a good claim). I consider below the slightly different question whether the litigation was being pursued for a collateral object, but I am satisfied that there is no question of CPC threatening litigation that it knew to be groundless.

This tort is usually referred to as abuse of process: see Clerk & Lindsell on Torts (21^st edn, 2014) §16-62. It has its origin in the case of Grainger v Hill (1838) 4 Bing NC 212. It is a rare tort – there appears to have been only one other reported case in which such an action has succeeded, Gilding v Eyre (1861) 10 CB (NS) 592 (see Clerk & Lindsell at §16-64) – but its continued existence as a tort (and as a distinct tort from that of malicious prosecution of civil proceedings) was recognised by the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance Ltd [2014] UKPC 17.

The essence of the tort is the abuse of the process of law to effect an object not within the scope of the process, or a purpose not within the scope of the action (that is, a

As to what counts as a collateral or improper purpose, in Goldsmith v Sperrings Ltd [1977] 1 WLR 478, Bridge LJ said at 503E-F:

“In my judgment, one can certainly go so far as to say that when a litigant sues to redress a grievance no object which he may seek to obtain can be condemned as a collateral advantage if it is reasonably related to the provision of some form of redress for that grievance. On the other hand, if it can be shown that a litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and that, but for his ulterior purpose, he would not have commenced proceedings at all, that is an abuse of process.”

This was not actually said in the context of a claim in tort but in the context of an application to stay proceedings as an abuse of process, but at a high level of generality the same principles are applicable to the tort: see Land Securities plc v Fladgate

In Crawford v Sagicor Lord Wilson at [63] described as a “helpful metaphor” that of a stalking-horse suggested by Isaacs J in the High Court of Australia in Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91, where he referred to the proceedings:

“being merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim”

Lord Wilson continued:

“The metaphor aids resolution of the conundrum raised by the example of a claimant who intends that the result of the action will be the economic downfall of the defendant who may be a business rival or just an enemy. If the claimant's intention is that the result of victory in the action will be the defendant's downfall, then his purpose is not improper: for it is nothing other than to achieve victory in the action, with all such consequences as may flow from it. If, on the other hand, his intention is to secure the defendant's downfall—or some other disadvantage to the defendant or advantage to himself—by use of the proceedings otherwise than for the purpose for which they are designed, then his purpose is improper.”

Mr Stewart submitted that the tort was committed by the Defendants in issuing the four sets of court proceedings. He also submitted that the threats of litigation, and in particular the threats that bankruptcy proceedings would be commenced and prosecuted against Mr Holyoake, were tortious.

I will start with the four sets of proceedings. The first was the Commercial Court claim issued on 19 March 2012 (paragraph 290 above). That was at a stage when (i) Mr Holyoake had neither provided security over the Ibiza property nor repaid £22.74m by 28 February as envisaged by the Supplemental Loan Agreement, and the loan had therefore become due; (ii) CPC however had no other security for the loan (except for a charge over the Blue Valley shares, of little value in itself); and (iii) CPC had approached Investec to take over the Investec facility, but had been rebuffed. In those circumstances the only real courses of action open to CPC to recover the loan were either to sue Mr Holyoake or to negotiate an agreement with him which would be likely to lead to repayment. What CPC actually did was issue the proceedings and then negotiate with Mr Holyoake, which led to a number of successive proposals (the novation of the loan, the distribution in specie, the SPA) and ultimately the Escrow Deed (paragraphs 324-326 above). Each of these was designed to lead to CPC being repaid without having to take the proceedings to trial.

Mr Stewart submitted, and I accept, that CPC was not itself keen on litigation: Mr Dean said in his witness statement that when he took over (at the end of March 2012) CPC was very cautious about progressing the litigation, the overriding concern being that Mr Holyoake’s other creditors would step in, that that would lead to a collapse of Mr Holyoake’s property ventures, and that CPC as an unsecured creditor would lose its money; there were also concerns about how quickly judgment could be obtained, and how any judgment might be enforced. He later referred to the “four corners” strategy, a set of guiding principles that he had discussed with Mr Christian Candy as to how best to handle Mr Holyoake, the fourth of which was to try to avoid litigation. I accept therefore that CPC were reluctant to press their proceedings to trial.

Nevertheless it seems clear from the authorities I have referred to that it is not abusive for a claimant to issue proceedings in the hope of settling them on suitable terms, unless he is seeking “some wholly extraneous benefit … not connected with the relief sought”, “pursuing an ulterior purpose unrelated to the subject-matter of the litigation”, or bringing proceedings as a “stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim”. CPC’s legal claim was brought to enforce the loan to Mr Holyoake and the relief sought was repayment of

CPC’s second claim was issued in the Chancery Division on 20 November 2012 (paragraph 344 above). That was at a stage when Mr Holyoake had defaulted in paying the first instalment due under the Extension Agreement. Mr Dean said in an e-mail to him of 7 November that that was particularly concerning because the agreement was predicated on a repayment profile that he had supplied; and in another on 8 November that there came a point when repeated failure to follow through with contractual terms he had agreed to undermined any value in new agreements. But the issue of proceedings did lead to the negotiation and agreement of the Second Extension Agreement and JMA (paragraph 345 above), and I infer that CPC’s purpose in issuing them was indeed to make it more likely that Mr Holyoake would agree to sign new terms which would be to CPC’s benefit. The Second Extension Agreement and JMA were to CPC’s benefit not only because the JMA obliged Mr Holyoake to try and sell the property and gave CPC the restriction and step-in rights, but also because there was a cost to Mr Holyoake in terms of an Extension Fee of £2m.

Do these benefits make the proceedings abusive as being pursued for some ulterior purpose unrelated to the subject-matter of the litigation? In my judgment they do not. Apart from the Extension Fee of £2m the other benefits were all designed to make it more likely that in due course CPC would receive repayment of the (balance of the) £17.74m, which is exactly what the proceedings were designed to do.

The £2m Extension Fee is different because CPC had no existing claim to the £2m and could not have recovered it in the proceedings. But I do not think it was unrelated to the subject-matter of the litigation or outside the ambit of the proceedings. The claim in the proceedings (which was in fact well-founded) was that Mr Holyoake’s failure to pay the first instalment under the Extension Agreement meant that the whole sum was due. What Mr Holyoake wanted, and in the event secured by the Second Extension Agreement, was more time to sell GGH (or refinance). That was valuable to him because he wanted to sell GGH with the benefit of planning rather than as it stood without it. It was evident that if agreement could not be reached then

CPC’s third claim was issued on 20 May 2013 (paragraph 353 above). The claim was issued against the background of a failure by Mr Holyoake to satisfy CPC that the buyer under the Sherbourne contract was a bona fide arm’s length buyer, and once Mr Holyoake had confirmed (falsely) that the buyer was the Al-Rajhi group, the claim was discontinued. No doubt it is a fair inference that CPC brought the proceedings to flush this point out; but that in my judgment is plainly well within the ambit of the proceedings – it was all directed at repayment of the loan.

CPC’s fourth claim was issued on 3 September 2013 (paragraph 359 above). That was against the background of Mr Holyoake failing to complete the sale of GGH and raising the possibility of claims under the CCA, and the telephone call of 22 August in which Mr Dean had told him he either had to agree to settle or cleanse those claims or there would be litigation (paragraphs 357-358 above) and it led to Mr Holyoake agreeing to settle the CCA claims at the Bulgari Hotel meeting and in due course entering into the Settlement Agreement and the Second Supplemental Extension Agreement (with a further Extension Fee). As before I find that all these matters were well within the ambit of the proceedings, and the proceedings were not issued with an ulterior motive unrelated to the subject-matter of the proceedings.

There were a number of other occasions in the history when litigation was threatened, starting with Wragges’ letter of 2 February 2012 (paragraph 203 above). I will deal with the threat of bankruptcy proceedings separately, but so far as the threat of taking proceedings is concerned, I see no reason to take a different view of these threats than of the actual proceedings brought. Mr Lord disputes that the tort of abuse of process can be committed where proceedings are threatened but not in fact issued, but even on the assumption that it can, CPC’s purpose in threatening them was in general terms to persuade Mr Holyoake to enter into agreements which would be more likely to lead to repayment of the monies due to it, and this purpose was within the ambit of the threatened proceedings.

That leaves the threat, also in Wragges’ letter of 2 February 2012, to bring bankruptcy proceedings and advertise them. I have already given some consideration to the threat to advertise (paragraphs 207-214 above), and concluded that it is inappropriate for a creditor to broadcast the fact of serving a statutory demand for the purpose of putting pressure on a debtor, and that to do so is likely to lead to a petition being dismissed. The present question is a different one, which concerns the use or threat of bankruptcy proceedings to extract, or seek to extract, a collateral benefit.

Mr Stewart relied on a line of authority which establishes that for a creditor to extract, or seek to extract, a collateral benefit from his debtor by the use or threat of bankruptcy proceedings may constitute extortion (and may do so even if the collateral

As this citation illustrates these cases are concerned with the question whether the conduct of the creditor will mean that the Court will not allow him to pursue bankruptcy proceedings (“disqualified from invoking the powers of the court…will not allow him to make use of the process which he has abused.”). In Re Shaw, Re a Debtor (883 of 1927) and In re Majory itself, the question in each case was whether a receiving order should be made on the creditor’s petition; and in Re a Judgment Summons the question was whether the same principle applied to a creditor applying for an order under s. 5 of the Debtors Act 1867.

Mr Lord submitted that this line of authorities was quite distinct from the authorities concerned with the tort of abuse of process. I accept this submission. In Land Securities v Fladgate Fielder, the claimants had sought to rely on In re Majory as an example of the same principle that underlies the Grainger v Hill line of authority on the tort of abuse of process. That was rejected by the Court of Appeal. Etherton LJ said at [45]:

“Evershed MR did not refer to Grainger v Hill 4 Bing NC 212. His observation was expressly limited to abuse which would disqualify a party from invoking court proceedings. It said nothing about a cause of action in tort for abuse of process.”

And at [67], having said that both Grainger v Hill and Gilding v Eyre concerned a blatant misuse of a particular process within existing proceedings, and that statements describing a broader application of the test of abuse of process were all obiter, he continued:

“In particular, In re Majory [1955] Ch 60, which has been cited in support of a wider formulation, was not a claim in tort, but of opposition to a receiving order… There was no reference to Grainger v Hill, and Evershed MR referred only to the sanction of prohibiting the abuser from invoking the power of the court by the proceedings he had abused.”

And Moore-Bick LJ said of In re Majory at [82]:

“The case is of interest mainly because of the discussion of the meaning of “extortion” in the context of bankruptcy, but it is clear that the court was not concerned with a claim of the kind considered in Grainger v Hill. Rather, the question was whether the creditor should be prevented from pursuing the proceedings because they involved an abuse of the process. I agree, therefore, that it does not shed any light on the question that we have to decide in this case.”

It seems to me to follow that the bankruptcy cases, although no doubt based on the same broad public policy that proceedings should not be abused, are not directly applicable to the tort of abuse of process. In particular the very narrow identification in such cases of what constitutes a collateral advantage is not in my judgment relevant to the tort, where the test of whether the proceedings are being abused in such a way as to be tortious remains that identified in Crawford v Sagicor of being used for some wholly extraneous benefit, pursuing an ulterior purpose unrelated to the subjectmatter of the litigation, and a stalking-horse to coerce the defendant entirely outside the ambit of the legal claim. Mr Stewart relies on Wragges’ letter as seeking, under the threat of bankruptcy proceedings, two collateral benefits in the shape of (i) costs which he said went beyond those properly claimable under the Loan Agreement and (ii) a minimum of £20m under the Declarations of Trust. So far as the second is concerned, Wragges were not demanding payment of the £20m but reserving CPC’s rights to it (paragraph 206 above) and I do not think it is a relevant collateral benefit at all; so far as the first is concerned, I do not propose to consider whether the claim for costs was justified or not – it was not in my judgment unrelated to the subjectmatter of the litigation, or entirely outside the ambit of the legal claim. I therefore find that no tort was committed.

The leading case which considers this tort is the decision of the House of Lords in

The claim as advanced by Mr Stewart under this head is that the actions of the Defendants constituted wrongful interference in the activities of both Mr Holyoake and Hotblack; and that “If it is right that the tort arises from wrongful interference in a third party with intention to harm the claimant” then the Defendants’ wrongful acts directed against Mr Holyoake harmed (and were intended to harm) Hotblack and hence are actionable by Hotblack; while their wrongful acts directed against Hotblack harmed (and were intended to harm) Mr Holyoake and hence are actionable by him.

Despite the conditional way in which this submission is expressed, it seems to me to follow from the way the Court of Appeal described the tort in Emerald Supplies that the tort does indeed require three parties. In simple terms the tort is made out where A uses unlawful means against B with the intention of causing loss to C, and enables C to sue A for the loss thereby caused to C. Thus the classic cases which exemplify the tort are where A uses unlawful acts to dissuade B from dealing with C: see the cases referred to by Lord Hoffmann in OBG at [6] of Garret v Taylor (1620) Cro Jac 567 (driving away customers of a quarry by unlawful threats) and Tarleton v M’Gawley (1794) Peake 270 (using cannon to drive away a canoe from approaching a rival trader’s ship).

Mr Lord had a number of submissions in answer to this claim. One was that the wrongful acts relied on (which were the same threats, intimidation and coercion of Mr Holyoake which were relied on as constituting the tort of intimidation, together with the same extortion under colour of due process which was relied on as constituting the tort of abuse of process) were all said to have been directed against Mr Holyoake rather than Hotblack, so that Mr Holyoake cannot in any event have any claim for this tort. That seems to me to be right: Mr Holyoake is in the position of B, not C. The effective question therefore is whether Hotblack can bring a claim for unlawful acts committed against Mr Holyoake.

Mr Lord’s primary submission however was there were no relevant unlawful acts. I accept this submission. The unlawful acts relied on by Mr Stewart are those that I have already considered for the purposes of the claims in intimidation and abuse of process, and for the reasons already given, I have found that none of these claims is made out; if they are not made out for the purpose of the two-party torts, I do not see on the facts of this case how they could establish the three-party tort of causing loss by unlawful means. As Lord Hoffmann explained in OBG at [49], there are cases, such as where A dissuades B from dealing with C by unlawful acts, where B suffers no loss but C does, so the fact that B has no claim does not prevent C having one. But the present does not seem to me a case like that: the effective question is whether Mr Holyoake was coerced by unlawful threats or intimidation or abuse of process, and if (as I have found) he was not, then Hotblack cannot have a claim either.

That makes it unnecessary to consider a further submission by Mr Lord that since Hotblack was effectively under the control of Mr Holyoake (and to all intents and purposes his alter ego) it makes no sense to say that anything done by the Defendants interfered with his and Hotblack’s liberty to deal with each other, it being essential that the unlawful means “must affect the freedom of [B] to deal with [C]”: see paragraph 432(4) above. In those circumstances Mr Lord submitted that Mr Holyoake and Hotblack were not third parties in respect of each other for the purposes of this tort, but co-claimants, and that it would be a nonsense for the tort to be available to them in this way. That raises quite a difficult issue, and I am not sure it is right. One of the features of this case is that the Claimants alleged a number of wrongs directed against Mr Holyoake, but wished to claim damages for Hotblack’s loss of profits, which on the face of it was a loss suffered by Hotblack, and I suspect that one of the reasons for introducing this tort into the pleadings was an attempt to overcome that potential difficulty. Had the facts been made out, I think there is much to be said for the view that Hotblack would indeed have had a claim on this basis. As it is, the point does not arise and I do not propose to resolve the issue.

I have referred to the conspiracy claim above (paragraphs 266-287). As there set out, the elements of the tort are: (i) a combination; (ii) to use unlawful means; (iii) with the intention of injuring the claimant by the use of those unlawful means; and (iv) the use of the unlawful means must cause a claimant to suffer loss or damage as a result: see eg Digicel (St Lucia) Ltd v Cable & Wireless plc [2010] EWHC 774 (Ch) per Morgan J at Appx I [2].

As also there set out the pleaded case is that the conspiracy had two purposes (1) to obtain by unlawful means GGH (or all or part of the benefit of it and the redevelopment opportunity it represented) for the benefit of CPC or the Defendants, or (2) to obtain substantial sums of money by unlawful means from the Claimants. I have already considered whether any conspiracy to acquire GGH by unlawful means came into existence at any time up to March 2012 and concluded that it did not (paragraph 287 above).

The next question is whether any such conspiracy came into existence in the remainder of the period up to the repayment of the loan. Again I conclude that it did

The other limb of the alleged conspiracy is that of obtaining substantial sums of money from the Claimants by unlawful means. Again I find that no such conspiracy came into existence at the outset of the loan in October 2011: the Defendants did negotiate the terms of the loan with the aim of getting generous returns, but I do not accept that they used, or agreed or combined to use, unlawful means to do so. Thereafter their efforts were directed at securing the sums due under the terms of the

I accept that from then onwards Mr Christian Candy was keen for Extension Fees to be charged, and that Mr Dean implemented this, and that this is sufficient to amount to a combination between at any rate those two (and CPC itself, as I accept that a company can conspire with its directors: see Belmont Finance Corp v Williams Furniture Ltd [1979] Ch 250); it is not so clear that the other defendants had anything to do with this. Their intention was no doubt to benefit CPC, but it was to benefit CPC at the expense of Mr Holyoake and I will assume, without deciding, that this is sufficient to satisfy the requirement that their intention was to injure Mr Holyoake: compare the discussion in OBG of the similar mental element in the tort of causing loss by unlawful means (namely an intention to cause loss to the claimant) at [62]-[63] per Lord Hoffmann and at [167] per Lord Nicholls, particularly the latter’s reference to the case where “loss to the claimant is the obverse side of the coin from gain to the defendant”. And the payment of substantial Extension Fees undoubtedly did cause Mr Holyoake loss.

That means that the critical question is whether they intended to use unlawful means to obtain the Extension Fees. I do not see that they did. I have not found any unlawful threats to have been made in the relevant period: the effective threat, deployed for example by Mr Dean on his telephone call of 22 August 2013 and at the Bulgari Hotel meeting on 6 September 2013, was to refuse any further time and enforce the existing agreement by litigation, which would be ruinous for Mr Holyoake, but which I have found not to be an unlawful threat. And I have also found that the Defendants did not commit the tort of abuse of process. CPC was not obliged to give Mr Holyoake any further time at all. Leaving aside for the moment the impact of the CCA, it could stipulate for whatever terms it wanted as the price of granting a further extension: as I have already said, that was no doubt an example of CPC using its commercial muscle, but I do not see that it was unlawful. In my judgment therefore this second conspiracy claim is not made out either.

That makes it unnecessary to consider the other questions argued in relation to this tort. Mr Lord said that the conspiracy claim (in particular the combination of the Defendants, and the intention to injure Mr Holyoake) had not been properly put to the witnesses, but I do not propose to examine the evidence in detail on this point.

Mr Lord also said that many of the unlawful means relied on in support of the conspiracy were not capable in law of supporting it. A large number of these were relied on by Mr Stewart, most of which I have already considered. Taking them very briefly:

The one alleged unlawful means about which I should say a bit more is blackmail. Blackmail is a crime (under s. 21 of the Theft Act 1968), and it is established that a crime may be relied on as unlawful means for the purposes of the tort of conspiracy: Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19. By s. 21 of the Theft Act, a person is guilty of blackmail if, with a view to gain for himself or with intent to cause loss to another, he makes any unwarranted demand with menaces; and for this purpose a demand with menaces is unwarranted unless the person making it does so in the belief (a) that he has reasonable grounds for making the demand and (b) that the use of the menaces is a proper means of reinforcing the demand. Mr Lord submitted that the allegation of blackmail was hopelessly unparticularised and should not be entertained; that there were no menaces sufficient to ground a charge of blackmail; and that in any event the Defendants had a sincere belief that the demands they made were warranted.

Mr Stewart in fact simply relied on the same threats and intimidation as were relied on in support of the claims in duress, actual undue influence and intimidation. He pointed out that blackmail does not require the threat to have been to do anything unlawful, as is shown by the example of the ordinary blackmailer who threatens to report his victim to the police unless he is paid off. I was not however addressed on what counts as “menaces” for the crime of blackmail, or whether it includes every threat. “Menaces” is no doubt an ordinary English word and in ordinary use it has overtones of something more sinister than a simple threat – for a creditor to tell a debtor that unless he agree to X the creditor will sue him is undoubtedly a threat but I rather doubt it would be ordinarily be regarded as menacing, even if the litigation were likely to be ruinous.

Be that as it may, in circumstances where I have rejected the claims in duress, actual undue influence and intimidation, it would I think be surprising if the same matters as were relied on amounted to blackmail, not least, as Mr Lord submitted, because the effect of the definition in s. 21 of the Theft Act is that whether a demand is unwarranted depends on the subjective belief of the person making the demand: R v Harvey (1980) 72 Cr App R 139. So for example, I have concluded that it was inappropriate for Wragges to threaten to advertise a statutory demand (paragraph 214 above). Even if however that were to be correctly characterised as “menaces”, the Defendants would not be guilty of blackmail if they believed that they had reasonable grounds for making the demands in the letter, and that the threat to advertise was proper (which I have found that they did believe (paragraph 215 above)); and in criminal proceedings the onus would be on the prosecution to negative this if the issue were raised. In those circumstances I accept Mr Lord’s submission that the allegation of blackmail is insufficiently particularised. Blackmail is a serious criminal offence – it carries a maximum term of 14 years’ imprisonment – and if the Defendants are to

Again to take an example, I have found that at the meeting in Guernsey on 6 April, Mr Christian Candy probably did tell Mr Holyoake that if he did not do what CPC wanted CPC would ring up all the banks who had lent to him and tell them that they intended to bankrupt him (paragraph 224(3) above). That was a threat, and may or may not have amounted to “menaces”, but no attempt was made to establish that Mr Candy either did not believe that he had reasonable grounds for making the demands, or that he did not believe that the threat was proper. But if that was to be relied on as constituting blackmail, that was in my judgment what was required. (That is quite apart from the fact that I have found that the effective cause of Mr Holyoake entering into the Supplemental Loan Agreement was the threat of litigation which was not unlawful).

I conclude that the tort of conspiracy by unlawful means has not been established.

These claims relate to two separate matters. The first is the approach by CPC to Investec between about 9 and 12 March 2012. The second is the instruction to Mr Knuckey to find out if Mr Holyoake (and Mr Wells although he is not a claimant) had any relevant criminal convictions.

As to the first, I have found that although the evidence does not really establish that Mr Candy said anything about CPC’s loan to Investec, Mr Lord accepted that he did tell them about it (paragraph 261 above). This is said to have been unlawful data processing contrary to the DPA, specifically a breach of the duty in s. 4(4) of the DPA on a data controller to comply with the data protection principles.

The relevant provisions of the DPA are as follows:

It is now possible to apply these provisions to the facts. What Mr Candy disclosed to

Investec was that CPC had made a loan to Mr Holyoake. If that information was

“data”, there is no doubt it was “personal data” because it related to a living individual who was identifiable from the data; and there is no doubt that disclosing it to Investec was “processing” it, because this expressly includes disclosure of the data. The questions are (i) whether the information was “data” at all; (ii) whether the Defendants were “data controllers”; and (iii) whether the condition in para 6(1) of sch 2 was satisfied, that is whether the processing was necessary for the purposes of legitimate interests pursued by the data controller.

Mr Lord submitted that all that was disclosed was that Mr Holyoake had entered into a loan with CPC and there was no explanation as to why that was personal data. As I have said, there is no doubt that if that information was data, it was personal data, but I agree that the Claimants have not explained on what basis it was “data”. Mr Stewart simply submitted that the information was data, but without explaining how that fitted with the elaborate definition in s. 1(1). I received I think no submissions at all on this aspect of the case, but it is apparent from that definition that not all information held by one person about another is personal data, but only information that falls within one of the five sub-paragraphs (a) to (e). Of these (d) can be ignored (accessible record being defined by s. 68 in terms that plainly do not apply to CPC as it refers to health, educational, housing and social security records), as can (e), as CPC is not a public authority. Of the others I have not entirely understood what the precise scope of (a) and (b) is intended to be, but (a) would seem to be effective to catch computerised records of all sorts, as “processing” information expressly includes “holding” it, so a computerised record seems to me to be information which is being held, and hence which is being processed, by means of equipment operating automatically. I am not entirely clear what the precise purpose and effect of the remaining words is, but if a computerised record is created, that would I think be an example of information being processed by the computer in response to instructions given to it for that purpose; (b) would then include manual records of information which was intended to be entered into a computer, and (c) manual records but only if they constituted a “relevant filing system” which requires that the information be structured in such a way that specific information in relation to a particular individual is readily accessible.

No attempt was I think made to explore in evidence what records CPC kept of the loan to Mr Holyoake or in what form. But there must have been some record somewhere, and I am prepared to assume that information about the loan would either have been recorded in a computerised record or in a manual record structured in such a way as to enable CPC and its directors to retrieve information about Mr Holyoake specifically. If nothing else, CPC no doubt had a copy of the Loan Agreement, which would have been either stored on a computer or in hard copy, and if the latter in such a way as to enable CPC to find it. It seems to me therefore that CPC must have held information about the loan to Mr Holyoake that was recorded in such a way as to be “data” and hence “personal data”.

What I have found much less straightforward is whether that means that CPC were processing that information when Mr Candy disclosed the existence of the loan to Mr Holyoake. By 12 March 2012 Mr Candy cannot have needed to look at CPC’s records (computerised or manual) to discover that CPC had made a loan to Mr Holyoake: that was something that he was by then very well aware of as he was living with it every day. There is no doubt that disclosing data is processing it, and that data includes the information held in a relevant record, and in a straightforward case a person who looks something up on a computer, or in a manual filing system, obtains information from the record, and then discloses it, is processing that data. (There is in fact a provision in s. 1(2)(b) which provides that disclosing personal data includes disclosing the information contained in the data, although I have not understood why this is necessary or what it adds as data is itself defined as information, not as the record in which it is held). But Mr Candy did not do this: what he did is disclose information which was in fact the same information as was recorded in CPC’s records but without taking the information from the record. That raises what, to my mind at any rate, is not a simple question which is whether he thereby disclosed the information in the record.

I have come to the conclusion that he did not. What in my judgment he disclosed was the information in his head, not the information in CPC’s records, and the fact that the same information could in fact be found in CPC’s records does not mean that what he was disclosing was that information. I should say that I can see arguments to the contrary and in the absence of any submissions, I am far from confident that I have reached the right conclusion; but I have to decide the point, and it seems to me that the purpose of the Act is to regulate what a data controller does with information stored in a relevant record, and it does not seem consonant with that for the Act also to regulate what a person does with information in his own head that has not been derived from the records.

In those circumstances I conclude that there was no breach of s. 4(4) of the DPA.

Mr Stewart also relied on this as constituting the misuse of Mr Holyoake’s private information. Since I have held that CPC was entitled to disclose the fact of the loan under the terms of the Loan Agreement in protection of their own interests, this does not seem to me to be made out.

The other matter in respect of which claims under the DPA are advanced is the instructions given by CPC to Mr Knuckey to find out if Mr Holyoake had any criminal convictions.

Two separate points are taken. One is based on the allegation that Mr Knuckey unlawfully accessed the PNC. For these purposes, the relevant data is the information recorded in the PNC and the relevant data controller is the police authority with responsibility for the records held on the PNC. Mr Knuckey is said to have committed an offence under s. 55 of the DPA (which makes it an offence for a person knowingly or recklessly to obtain or disclose personal data without the consent of the data controller) and the Defendants to have been guilty both of offences under s. 44 or s. 45 of the Serious Crime Act 2007 (which make it offences to encourage or assist someone else to commit an offence), and of s. 55 of the DPA themselves (on the basis that they had knowingly or recklessly obtained data without the consent of the relevant police authority, and disclosed it to each other). This claim fails because I have held that it is not open to the Defendants in this action to go behind the decision of Warby J that Mr Knuckey did not unlawfully access the PNC, and that even if it were, the allegation is not established (paragraphs 299-300 above). I proceed on the basis that Mr Knuckey obtained the information properly from some publicly available source, although no attempt was made to explain to me what that might be.

The other point that is taken is a further alleged breach by the Defendants of s. 4(4). This is based on the Defendants themselves being data controllers. Again this claim was not analysed in any detail before me, but the pleaded case proceeds on the basis that the information which Mr Knuckey obtained and disclosed to Mr Smith and which he then passed on to the other Defendants was Mr Holyoake’s personal data. That was the information that he had no unspent criminal convictions: that was clearly recorded somewhere, and I accept that that information was therefore his personal data. It is then said that in obtaining that information, the Defendants were engaged in processing the data, “processing” being expressly defined to include “obtaining” data or information; and that by receiving and sharing the data they became data controllers.

I will assume this is right, although I have not quite understood if it is said that they became data controllers because they received information which formed part of a record held by someone else, or if the e-mails themselves are said to have been a new record held by CPC. Mr Lord relies again on para 6(1) of sch 2, submitting that CPC had a legitimate interest in knowing if Mr Holyoake (or indeed Mr Wells) had a criminal record as that information could obviously have been material to the approach taken to the recovery of the loan. I accept this submission, and it is not clear to me whether the claim for breach of s. 4(4) was dependent on the allegation that Mr Knuckey had accessed the PNC unlawfully (in which case the data would not have been obtained fairly and lawfully) or whether it was intended to be independent of that allegation. If the latter, then on the assumption that Mr Knuckey obtained the information properly from some public source, I do not see anything unfair or unlawful (or prejudicial to the rights and freedoms or legitimate interests of Mr Holyoake for the purposes of the exception to para 6(1) of sch 2) in CPC discovering that Mr Holyoake had no unspent convictions. Nor can this have caused him any damage, and it is difficult to see that it could have caused him any distress at the time when he did not know about it. Now that he does know about it, it is no doubt galling to discover that the Defendants thought he might have spent time in prison and wanted to find out if he had, but the discovery by Mr Smith that he had not, and his sharing that with the other Defendants, does not seem to me to be something that can itself have caused distress.

Mr Stewart again relied on this as constituting the misuse of private information. On the basis that Mr Knuckey must have obtained the information properly from some public source, there is no privacy in the information and this claim is also not established. Penalties

The next claim pleaded is that certain provisions of the agreements were penalties. These were (i) cl 8.3 of the Loan Agreement providing for payment of the Redemption Amount on early repayment of the loan; (ii) the Extension Fees; and (iii) the provision for payment of interest (called the Double Interest Charge in the Particulars of Claim).

The law on penalties was comprehensively reviewed and restated by the Supreme

The first pleaded claim is that cl 8.3 of the Loan Agreement is a penalty in that it imposed a requirement to pay the Redemption Amount on early payment of the loan. The Redemption Amount was the whole interest that would have accrued by the end of the two year period. That was the sum of £5.74m (which added to the £12m loan

There is a longer answer. This is that the £5.74m was not in the event paid under cl 8.3 at all. In terms cl 8.3 applied if the loan was repaid early. In December 2011 Mr Holyoake did indeed say that he intended to repay the loan early (paragraph 191 above) but he did not in fact do so. What happened instead is that he signed the Supplemental Loan Agreement on 10 February 2012 which, among other things, amended cl 11.1 to make it clear that in the event of a default the Redemption Amount became payable, something which was not clear before (paragraph 219(2) above). When Mr Holyoake defaulted in complying with the Supplemental Loan Agreement, the effect was that the £17.74m became payable under cl 11.1 as amended. That provision was indeed a provision which operated on breach, and so was within the scope of the penalty rule, but there are I think nevertheless three reasons why that does not entitle Mr Holyoake to relief.

First that is not the claim that is pleaded or that has been argued.

Second, in any event I think it clear that CPC had a legitimate interest in securing that the £17.74m should be payable in the event of a default, and that the express provision to that effect in cl 11.1 was not extravagant, exorbitant or unconscionable. Whatever might have been the position if cl 11.1 stood on its own and the

Third, Mr Holyoake did not in fact in the end repay the £17.74m under cl 11.1 of the Supplemental Loan Agreement. Instead he agreed in the Escrow Deed of 14 June 2012 that if he did not repay the debt and did not complete the SPA a new debt of £17.74m would arise (paragraph 328(4) above). On the face of it that was a new obligation, and since under the terms of the Escrow Deed he was not obliged either to complete the refinancing and repay the debt, or to complete the SPA, this new obligation was itself not one that operated on breach, but on failure of a condition. That may be an example of clever drafting, but it seems to me that the effect is that Mr Holyoake agreed to pay the £17.74m not as a penalty for breach of contract but as a consequence of neither refinancing nor completing the SPA, and that that obligation was therefore not within the penalty rule. The debt was thereafter restated regularly, but if I am right that Mr Holyoake agreed to pay the £17.74m in the Escrow Deed in circumstances that it was not a penalty, nothing that thereafter happened made it one.

The next set of provisions that are said to be penalties are those charging the Extension Fees. The first Extension Fees were charged under the Extension Agreement of 26 October 2012 (paragraph 343 above). Under this agreement, two Extension Fees of £1.8m and £1.7m were payable, with provision for them to be credited against the debt if paid on time. In the event £1m of the first Extension Fee was not paid and was added to the debt (paragraph 344 above). The remaining Extension Fees were payable under successive agreements as follows: the Second Extension Agreement of 23 November 2012 (£2m), the Second Supplemental Extension Agreement of 15 October 2013 (£2m), the Fourth Supplemental Extension Agreement of 20 December 2013 (£1m) and the Final Supplemental Extension Agreement of 15 January 2014 (£1.5m) (paragraphs 345, 370, 375 and 376 above). These took the simpler form of being charged in any event. The total Extension Fees charged were thus £7.5m.

I will start with the latter four agreements, taking as an example the Second Extension Agreement. Here the position seems to me very simple. Mr Holyoake was in default under the previous agreement (the Extension Agreement) with the result that in accordance with its terms the whole debt had become due and indeed CPC had issued proceedings for it (paragraph 344 above). CPC agreed instead to give him more time for repaying in return for the Extension Fee of £2m. That is as I have already said the price that CPC demanded for the extension (paragraph 423 above). Mr Holyoake agreed to that price because he needed the extension. He therefore entered into the Second Extension Agreement under which payment of the Extension Fee was a primary obligation, payable in any event, not simply on default. As a matter of form therefore this provision did not operate on breach and did not engage the penalty rule. Nor in my judgment did it do so in substance either. It is true that the occasion which gave rise to the charging of the Extension Fee was the fact that Mr Holyoake was in breach of the previous agreement (the Extension Agreement), and in this loose sense the £2m can be regarded as the charge payable by him for his default – indeed it can be regarded as an example of the “Bad Boy penalties” Mr Christian Candy had referred to (paragraph 280 above). If the Extension Agreement itself had provided that on any breach a fee of £2m would be payable, the penalty rule would no doubt have been engaged. But it did not, and the £2m was not payable under the terms of the Extension Agreement: Mr Holyoake was not on 22 November 2012 under any obligation to pay it at all. What made it payable was not a provision of the Extension Agreement but Mr Holyoake’s entry into the Second Extension Agreement under which he received an extension of time. That illustrates that in a real and substantive, and not just a formal, sense, this was a payment in return for consideration rather than a payment due under an obligation arising on breach. If that is so, the penalty rule is not engaged and the question of whether the price was an extravagant or exorbitant one does not arise. The penalty rule is not available to regulate the price payable

The same analysis applies to the three successive Extension Agreements.

That leaves the Extension Fees charged under the Extension Agreement of 26 October 2012. This is slightly different because here the Extension Agreement itself provides that if paid on time the Extension Fees are credited against the debt, as follows

I have come to the conclusion that it is not. The point does not seem to me entirely straightforward (and I have had no assistance on this question by way of submissions) as I can see the force of the argument that there is no real difference in substance between a provision which says “you will pay me £x in reduction of your debt but if you do not pay on time, the debt will increase by £x” and a provision which says “you will pay me £x, and if you pay me on time, the debt will reduce by £x”, and if the penalty rule is to have practical value, it should not be too easy to circumvent it by drafting. But the deciding factor is I think that the Extension Fee is expressly made payable in return for the extension of time. In general parties are I think free to decide what sums payable under a contract are payable for, at any rate as between themselves. That means that just as in the later Extension Agreements it was the price CPC demanded for the extension. If cl 3.2 had not contained the proviso for reduction of debt (in other words if it had stopped after “30^th November 2012”) I would have held it to be valid for the same reasons as the later Extension Fees. In those circumstances, I do not see that the addition of the proviso (which was for Mr Holyoake’s benefit) can turn the provision into one which is really a punishment for breach of contract. I therefore conclude, admittedly with some hesitation, that cl 3.2 is not in substance a provision operating on breach of contract and does not engage the penalty rule.

That leaves the Double Interest Charge. The complaint is that the £17.74m, which by cl 11.1 of the Loan Agreement (as amended by the Supplemental Loan Agreement) became due on default, already included interest calculated at the rate of 20% per annum on the £12m loan for the period of 2 years; but that each of the subsequent agreements contained provision for further interest to be charged (at 15% per annum)

In fact although each of the agreements did contain interest provisions, CPC did not charge any interest until the end of April 2013. The details are as follows:

I accept that the practical effect of this was to charge interest on interest. The initial interest charge of £970,299 was calculated on an outstanding debt of £13.6m reducing to £13.3m which itself was a figure calculated using the £17.74m as a starting point. The interest charges under the successive Extension Agreements were all calculated on the basis of the Debt outstanding under the previous agreement, which included the successive interest charges. In effect therefore the interest was compounded every time there was a new agreement.

Were these interest charges payable under contractual provisions operating on a breach of contract? I will start with the Second Supplemental Extension Agreement. This provided for an extension of time to repay the Debt as defined until the Final Repayment Date of 24 January 2014 (or earlier sale), subject to the payment of interim repayments, with a provision in cl 4.4 that interest would run in the meantime from 18 October 2013, that is from 3 days after the agreement. That was not dependent on there being a breach of the agreement: even if Mr Holyoake had kept scrupulously to the timetable for repayment laid down in the Second Supplemental Extension Agreement, he would have had to pay interest at 15% per annum (simple, not compounded) from 18 October under cl 4.4. In fact Mr Holyoake defaulted in making the interim repayments required by the Second Supplemental Extension Agreement, but he was not charged any more interest under cl 4.4 than if he had not defaulted. It seems to me, consistent with the analysis I have adopted in relation to the Extension Fees, that in those circumstances cl 4.4 was neither in form nor in substance a provision that operated on breach of contract. It was simply part of the price of CPC agreeing to the new repayment profile set out in the agreement.

The same analysis applies to the Third, Fourth and Final Supplemental Extension Agreements. In each case the fact that Mr Holyoake had defaulted in complying with the previous agreement gave CPC the opportunity to demand a new price for a further extension which in practice consisted of not only charging an Extension Fee but of restating the Debt to include the interest accrued under the previous agreement. Each new agreement then provided that interest should accrue from the date of the agreement. Again that was not dependent on breach, and Mr Holyoake would have been liable for it whether or not he had complied with the new timetable laid down. Those provisions were not, it seems to me, either in form or in substance, provisions that operated on breach of contract, and they did not engage the penalty rule.

That leaves the interest of £970,299 charged under the Second Extension Agreement. That seems to me slightly different. Unlike the later agreements, the Second Extension Agreement did not contain any provision for interest to accrue on the Debt if the timetable for repayment were adhered to. Instead the Debt (at that stage £16.85m) could be repaid in accordance with one or other of the repayment schedules (either by 30 April 2013 if no Qualifying Contract had been entered into, or by 1 October 2013 if one had). Those repayment schedules were each calculated to lead to the repayment of precisely £16.85m and if Mr Holyoake had adhered to them, he would not have been charged any further interest. The interest that was charged was charged under cl 4.1 which provided as follows:

“If (i) any part of any Debt Repayment is not paid to CPC on the relevant date specified in the Debt Repayments Schedule or (ii) the whole of the Debt has not been repaid by the Long Stop Date (as defined in the Joint Marketing Agreement) or (iii) any steps are taken by or on behalf of an [sic] security holder to enforce any security granted by the Company over the Property, then the Debt shall be released and the portion of the sum of £16,850,000 that has not been repaid shall be a new debt owed to CPC (the New Debt) and shall be paid in cleared funds to CPC by no later than 5.00 p.m. on the next Business Day (New Debt Date) without set off or withholding or deduction. Interest will accrue on the New Debt from the New Debt Date until final payment at the rate of 15% per annum compounded monthly on the last day of each month.”

It can be seen that the first of the events which trigger the clause is a failure to keep to the repayment schedule, which is undoubtedly a breach of the agreement, and that was the event relied on by CPC in its fourth claim. That seems to me to have the effect that the interest actually charged was pursuant to a contractual provision operating on breach such as to engage the penalty rule.

That then raises the question whether the provision was extravagant or exorbitant or unconscionable. It is not I think in doubt that the onus on this is on the person alleging that it is (cf Cavendish Square Holding BV v Makdessi at [100], [133], [143] and [309]). No submission was made that a default rate of 15% per annum compounded monthly was an extravagant or exorbitant rate for a commercial agreement (and indeed it was less than the rate of 20% per annum for the loan, first suggested by Mr Holyoake himself). The pleaded case and submission was that it was penal because Mr Holyoake was being charged interest not only on the principal but also on the interest included in the £17.74m.

I am not persuaded that it was. I have already held that there was nothing penal about the £17.74m becoming payable on default. By the time of the Second Extension Agreement on 23 November 2012 CPC were entitled to payment of the £17.74m – indeed they had had a good claim to the £17.74m since 28 February 2012 under the terms of the Supplemental Loan Agreement, but had repeatedly given Mr Holyoake more time in the series of Escrow Deeds and then the Extension Agreement. In the Second Extension Agreement, CPC again gave more time for repayment in accordance with a repayment schedule while stipulating that if there were a default, the balance of the debt would all become due and interest would thereafter be payable. It is not suggested that it was penal to stipulate for the balance to become due on default, and I do not see how it could have been: such provisions are standard in agreements for payment of liabilities by agreed instalments, and CPC were already entitled to payment of the whole sum in any event: see The Angelic Star [1988] 1 Ll Rep 122 at 125 col 2 per Lord Donaldson MR (“the mere fact that the capital sum becomes immediately repayable upon a failure to comply with the conditions upon

Quite apart from this, the interest was not in fact charged until the Second Supplemental Extension Agreement of 15 October 2013 when Mr Holyoake agreed that it should be included in the Debt. That agreement was part of the suite of agreements agreed as part of the Settlement Deed which settled all existing claims between the parties. So far as the settlement of claims by Mr Holyoake was concerned, it provided at cl 4.1(a) for a full and final settlement of “all actual or potential claims and causes of action, past, present and future, whether known or unknown” which he might have against CPC, and that seems to me wide enough to include a claim that the interest charged under cl 4.1 of the Second Extension Agreement was a penalty. Instead of challenging the interest, Mr Holyoake agreed to pay it as part of the Debt. That seems to me a fresh payment obligation, in return for further consideration, and even if the interest had been penal, Mr Holyoake would have thereby become contractually obliged to pay it.

In these circumstances I find that none of the impugned provisions amount to penalties.

Mr Holyoake’s remaining claims are under the CCA. These claims are only advanced by Mr Holyoake personally and not by Hotblack.

I can take the law almost entirely from a convenient account given by Hamblen J in Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm) at [341]-[346] as follows:

“341.

Sections 140A-D CCA (headed “Unfair relationships”) were inserted into the CCA by the Consumer Credit Act 2006 in substitution for the regime that previously governed “extortionate credit bargains” (sections 137 to 140, now repealed). Unlike much of the CCA the Unfair relationships regime is not confined to agreements made with “consumers”, nor is it limited to lending up to a specified monetary threshold. It is, however, restricted to credit agreements entered into with natural persons; this reservation is accomplished by section 140C which defines a “Credit Agreement” as meaning: “any agreement between an individual (the ‘debtor’) and any other person (the ‘creditor’) by which the creditor provides the debtor with credit of any amount”.

342.

The core features of the Unfair relationships provisions are that section 140A provides that a Court may make an order under section 140B in connection with a Credit Agreement if it determines that the relationship between the creditor and the debtor arising out of the Credit Agreement (or the Credit Agreement taken together with any “related agreement”) is “unfair” to the debtor because of one or more of the following:

(1)

any of the terms of the agreement or of any related agreement;

(2)

the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement; or

(3)

any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).

343.

The CCA does not prescribe the factors which the Court can or should take into account in making this determination, instead it simply directs the Court to “have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor)” (s.140A(2) CCA). Once a debtor alleges that the relationship is unfair, the burden lies on the creditor to prove the contrary: section 140B(9).

344.

The consequences of a finding of unfairness are potentially draconian. The orders under section 140B may include discharging the debtor's indebtedness in whole or in part and/or requiring the creditor to repay some or all of the sums paid by the debtor under the Credit Agreement or any related agreement.

345.

In considering the test of unfairness guidance is provided by the following authorities in particular: Maple Leaf Macro Volatility Master Fund & Aor v Rouvroy & Or [2009] EWHC 257 (Comm) (“Maple Leaf”); Paragon

Mortgages Ltd v McEwan-Peters [2011] EWHC 2491 (Comm) (“Paragon Mortgages”); and Rahman & Ors v HSBC Bank Plc & Ors [2012] EWHC 11 (Ch) (“Rahman”).

346.

These authorities suggest that the matters likely to be of relevance include the following:

(1)

In relation to the fairness of the terms themselves:

a.

whether the term is commonplace and/or in the nature of the product in question (Rahman [277]);

b.

whether there are sound commercial reasons for the term (Rahman [278]);

c.

whether it represents a legitimate and proportionate attempt by the creditor to protect its position (Maple Leaf [288]);

d.

to the extent that a term is solely for the benefit of the lender, whether it exists to protect him from a risk which the debtor does not face (Maple Leaf [289]);

e.

the scale of the lending and whether it was commercial or quasicommercial in nature (Rahman [275]) (a court is likely to be slower to find unfairness in high value lending arrangements between commercial parties than in credit agreements affecting consumers); and f. the strength (or otherwise) of the debtors bargaining position (Rahman [275]);

g.

whether the terms have been individually negotiated or are pro forma terms and, if so, whether they have been presented on a “take it or leave it” basis (Rahman [275]);

(2)

In relation to the creditor's conduct before and at the time of formation:

a.

whether the creditor applied any pressure on the borrowers to execute the agreement (if an agreement has been entered into with a sense of urgency it will be relevant to consider to what extent responsibility for this lay with the debtor, as distinct from the creditor) (Maple Leaf [274]);

b.

whether the creditor understood and had reasonable grounds to believe that the borrower had experience of the relevant arrangements and had available to him the advice of solicitors (Maple Leaf [274]);

c.

whether the creditor had any reason to think that the debtor had not read or understood the terms (Maple Leaf [274]); and

d.

whether the debtor demurred at the time of formation over the terms he now suggests are unfair (this point has particular force if he did complain over other terms) (Maple Leaf [274]; Rahman [276]).

(3)

In relation to the creditor's conduct following formation and leading up to enforcement:

a.

whether any demand was prompted by an “improper motive” or was the consequence of an “arbitrary decision” (Paragon Mortgages

[54(b)]);

b.

whether the creditor has shown patience and, before leaping to enforcement, has taken steps in the hope of reaching some form of accommodation (for example by attending meetings, engaging in correspondence and/or inviting proposals) (Rahman [280–281]); and

c.

whether the debtor has resisted attempts at accommodation by raising unfounded claims against the creditor (Rahman [280–281]).”

It was not disputed that there are in principle three stages in the application of these provisions:

As to the first question, save for one point there was no dispute that the provisions applied to the relationship between Mr Holyoake and CPC. The original Loan Agreement was a credit agreement as defined in s. 140C(1) as it was an agreement between Mr Holyoake, an individual, and CPC by which CPC provided Mr Holyoake with credit (itself defined in s. 9(1) as including a cash loan, and any other form of financial accommodation). The subsequent agreements such as the Supplemental Loan Agreement, the various Escrow Deeds, and the Extension Agreements were all either themselves credit agreements or related agreements.

The one point in issue between the parties concerns the Settlement Deed. Mr Stewart’s submission was that this too was either a credit agreement or a related agreement within the meaning of the CCA; Mr Lord’s submissions were (i) that this argument was not open to Mr Stewart on the pleadings; (ii) that the Settlement Deed is neither a credit agreement nor a related agreement and cannot itself be reopened under the CCA; and (iii) that as a bona fide settlement of the CCA claims, it either could not or should not be reopened.

The Settlement Deed, dated 15 October 2013, was entered into against the background of CPC’s fourth claim issued on 3 September 2013 (paragraph 359 above). The relevant provisions are as follows:

Mr Stewart accepted that the terms of cl 4.1 were wide enough to settle Mr

Mr Lord’s first answer was that this was not open on the pleadings. The Re-Amended Particulars of Claim, having pleaded (at paragraph 195) that the Loan Agreement was a credit agreement within s. 140C(1) of the CCA, continued (at paragraph 196):

“Likewise, the Supplemental Loan Agreement and all the First Schedule Agreements by which the debt owed to CPC by Mr Holyoake was restated and/or amended were also “credit agreements” under ss. 140C(1) or, alternatively, were linked transactions for the purposes of s. 140A-C and/or otherwise fall within s. 140C(4) and/or s. 140C(7) and/or 140C(8) of the Act.”

The First Schedule listed all the agreements between Mr Holyoake and CPC, including the Settlement Deed. But Mr Lord said that it was not an agreement by which the debt owed to CPC was restated or amended, and hence was not referred to in paragraph 196.

That is a narrow reading of the pleading and I do not accept it. As a matter of language the phrase “by which the debt owed to CPC by Mr Holyoake was restated and/or amended” can be read either (as Mr Lord would have it) as intended to define a sub-set of the First Schedule Agreements (such of the agreements as restated or amended the debt), or as a description of (all of) them. It would have been much clearer that the latter sense was intended if the phrase had been marked off by commas (“all of the First Schedule Agreements, by which the debt owed to CPC by

Mr Lord’s second point was that the Settlement Deed was not a credit agreement as it did not itself provide any financial accommodation, and that Mr Stewart had not explained why it was a related agreement. I do not accept this submission either. One of the provisions of the Settlement Deed was cl 3.1(c) by which the parties agreed to release to each other signed counterparts of the Second Supplemental Extension Agreement. That agreement extended time for repayment of the debt from 1 May 2013 to 24 January 2014 or earlier sale. I think that was clearly the provision of

“financial accommodation” and hence “credit” and that there is no doubt that the Second Supplemental Extension Agreement was itself a credit agreement within the meaning of s. 140C(1). The remaining question is whether the Settlement Deed is also an agreement under which CPC provided Mr Holyoake with credit. Since the effect of cl 3.1(c) was that CPC agreed to enter into the Second Supplemental

If I am wrong about that, it was in any event in my judgment a related agreement. By

Mr Lord’s third submission was that the Settlement Deed was a bona fide compromise of the CCA claims and if it could be unpicked, it would never be possible to settle a CCA claim. That cannot have been intended by the legislature. There appears to be no relevant authority on the CCA itself, but he referred, by way of analogy, to Binder v Alachouzos [1972] 2 QB 151. The plaintiff had sued the defendant on a number of loans, the defendant defending the action on the grounds that the plaintiff was an unregistered moneylender. The action was compromised shortly before trial, the defendant agreeing to abandon the contention that the plaintiff was a moneylender and to pay the plaintiff various sums. When he defaulted and the plaintiff sued him on the compromise agreement, the defendant contended that it was not binding, again relying on the Moneylenders Acts. The Court of Appeal held that he was bound by the agreement. Lord Denning MR said that the Moneylenders Acts were for the protection of borrowers and the judges would not therefore allow a moneylender to use a compromise as a means of getting round the Act; but it was important that the courts should enforce compromises agreed in good faith between lender and borrower (at 158A-B, D-F):

“If the court is satisfied that the terms are fair and reasonable, then the compromise should be held binding. For instance, if there is a genuine difference as to whether the lender is a moneylender or not, then it is open to the parties to enter into a bona fide agreement of compromise. Otherwise there could never be a compromise of such an action. Every case would have to go to court for final determination and decision. That cannot be right….

In my judgment, a bona fide compromise such as we have in the present case

(where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken. Both sides were advised by competent lawyers on each side. There was a fair arguable case for each. The case they reached was fair and reasonable. It should not be reopened.”

Phillimore and Roskill LJJ agreed. Phillimore LJ said that it was plain that it was a bona fide compromise, the terms of the agreement were not to be described as colourable, and the court (at 159D):

“ought to be very slow to look behind an agreement reached in circumstances like these.”

Roskill LJ said that while it has always been the policy of the courts not to allow the Moneylenders Acts to be evaded (at 160B-C):

“it is the law of this country, as Lord Denning MR has said, where there is a bona fide compromise of an existing dispute and that compromise includes a compromise of what, as Mr Joseph said, is basically an issue of fact, namely whether there had in fact been unlawful moneylending, especially where the compromise has been reached under the advice of counsel and solicitors, that that compromise is enforceable against the party seeking subsequently to repudiate it.”

There is an obvious danger in holding that any agreement settling CCA claims is effective to oust the Court’s powers under ss. 140A-C of the CCA, as it would open the way to lenders routinely requiring borrowers to settle any possible CCA claims, which would run the risk, as Mr Stewart submitted, of driving the proverbial coach and horses through the protection afforded by the CCA.

Moreover, in Binder the Court of Appeal appears to have laid emphasis on the fact that what was involved was a bona fide compromise of a genuine issue of fact as to whether the Moneylenders Acts applied at all. That principle has been applied to other statutory provisions: cf Foskett on Compromise (8^th edn) at §7-32 (although parties cannot contract out of the protection of the Rent Acts, that does not prevent a bona fide compromise of a genuine dispute of fact as to whether a statutory provision applies); A-G v Trustees of the British Museum [2005] EWHC 1089 (Ch) at [28] per Morritt V-C (a bona fide compromise could be made of the question whether a statutory prohibition on disposal of objects vested in the trustees as part of the museum’s collection applied); and FPH Law v Brown [2016] EWHC 1681 (QB) at [29] per Slade J (a bona fide compromise of an issue as to the enforceability of a CFA). But if that is the principle, it does not directly assist CPC. There was no issue, or none at any rate that has been identified, as to whether the agreements preceding the Settlement Deed were credit agreements such that the CCA applied. What was compromised was not any genuine issue of fact which went to the applicability of the CCA. What was compromised was any claim that Mr Holyoake had under the CCA.

I proceed therefore on the basis that the Settlement Deed does not act as a jurisdictional bar to the Court considering whether the relationship between the parties was unfair, both in the period up to and including the entry of the Deed and in the period thereafter.

On the other hand that does not mean the Settlement Deed is just to be ignored as if it did not exist. The policy considerations referred to in Binder – that it is the policy of the Court to encourage good faith compromises, and to enforce compromises when they are made – seem to me to continue to apply. In considering whether the relationship between the parties is unfair, or in considering what order, if any, to make in the exercise of the discretion in s. 140B, it seems to me highly relevant that the parties have reached a compromise of that issue, and for this purpose the matters referred to by the Court of Appeal in Binder – was there a genuine dispute, was there a fair arguable case on each side, was the compromise bona fide or were its terms colourable, are the terms fair and reasonable, has the lender taken undue advantage of the borrower, were both sides advised by competent lawyers – are just as applicable. Roskill LJ gave an example at 160D-E of a liquidator seeking the sanction of the court to a compromise where there is a moneylending defence:

“Is the court to investigate the whole matter, or can it look at the matter broadly and see whether a bona fide compromise should be arrived at or has been arrived at? In such a case it seems to me clear that the court should encourage and when appropriate enforce any bona fide compromise arrived at, especially one arrived at under legal advice.”

That is not directly applicable but is consistent with the idea that the Court should look at the matter broadly to see if a bona fide compromise has been reached on legal advice, and if it has should be very slow to go behind it.

The next question is whether the relationship between the parties was unfair, it being for CPC under s. 140B(9) to prove that it was not. I propose to consider this separately in relation to the period up to and including the Settlement Deed, and the subsequent period.

Five specific matters are pleaded as making the relationship unfair. One is the threats, intimidation and coercion relied on for the duress, actual influence and intimidation claims. The other four arise out of the terms of the agreements, namely (i) the provision in the Supplemental Loan Agreement making the whole debt plus all accelerated interest repayable; (ii) the Extension Fees; (iii) the Double Interest Charge; and (iv) the fact that Mr Holyoake was compelled to market GGH and sell it pursuant to the JMAs before it could be developed.

In relation to the earlier period, I do not propose to consider these one by one. I am satisfied that there was something to be said on both sides. On the one hand, it is not obviously fair on the face of it that in return for a loan of £12m in October 2011, CPC should be entitled on default not only to 2 years’ interest immediately, making the total repayable £17.74m, but in addition further interest on the both the £12m and the £5.74m from May 2013 when they have already had (or at any rate become entitled to) interest up to October 2013. And although I have held that the pressure exerted by CPC was not unlawful, I accept that that the combination of the risks of litigation and the personal liability of Mr Holyoake did put pressure on him to agree to CPC’s demands.

On the other hand this was high value lending between commercial parties, where the Court is likely to be slower to find unfairness. More significantly to a very large extent Mr Holyoake was the author of his own misfortune. He agreed to buy GGH at

In those circumstances, I am satisfied that the Settlement Deed was a bona fide compromise. In my view it should be given effect to and not disturbed. Taking the matters I have referred to above from Binder: there was indeed a genuine dispute whether Mr Holyoake had any viable CCA claims, there was a fair arguable case on each side, the compromise was bona fide and its terms were not colourable, and Mr Holyoake entered into it after receiving legal advice. Lord Denning MR also refers to whether the agreement reached was fair and reasonable, but this cannot require the Court to undertake a detailed examination of the underlying merits of the claims, as the whole purpose of the compromise is to avoid the necessity for that. That is why Roskill LJ referred to taking a broad view, and, taking a broad view, I consider that the terms were fair and reasonable. In return for giving up his CCA claims, Mr Holyoake not only obtained CCA’s release of its claims under the existing contracts, but also the withdrawal of the proceedings (in which, as Mr Lord submitted, the Qualifying Contract deception would have come to light) and a significant extension of time to sell GGH.

In relation to the period covered by the Settlement Deed, I therefore decline to go behind the Settlement Deed. That includes not only the settlement of the CCA claims, but also the terms of the Second Supplemental Extension Deed and the Second JMA as they were part of the same compromise. That therefore covers not only the fact that the £17.74m became payable on default, but also the Extension Fees charged up to and including the Second Supplemental Extension Deed (totalling £5m), the interest charged under the Second Extension Agreement (of £970,299) and the obligation in the Second JMA to market GGH. I do not think it matters whether technically I find that the relationship was not unfair because the parties had agreed to compromise that issue; or whether I say that even if unfair, I decline to make any order in these respects under s. 140B. The practical result is the same: I dismiss these

The remaining claims are only those that arise after the date of the Settlement Deed. Of the five matters pleaded (paragraph 506 above), the first is the threats, intimidation and coercion, but there are none relied on which took place after that date. The second is the acceleration of the debt and interest but this had already taken place under the Supplemental Loan Agreement, and was accepted by Mr Holyoake in the Second Supplemental Extension Agreement. The fourth is the obligation to pay interest not only on the principal amount of the debt but also on the accelerated interest; this too was accepted by Mr Holyoake in the Second Supplemental Extension Agreement which provided for interest on the entirety of the Debt (hence including the accelerated interest) from 18 October 2013. The fifth was the obligation to market and sell GGH under the JMAs; this was accepted by Mr Holyoake in the Second JMA. As I have already said the Second Supplemental Extension Agreement and Second JMA were themselves part of the compromise embodied in the Settlement Deed, and I do not think these features of the relationship can be regarded as unfair for the remainder of the period of the loan; or if they are, I decline to make any order under s. 140B in respect of them.

That leaves the Extension Fees. Only two Extension Fees were thereafter charged: £1m in the Fourth Supplemental Extension Agreement, and £1.5m in the Final Supplemental Extension Agreement. The Fourth Supplemental Extension Agreement was entered into on 20 December 2013 when Mr Holyoake was unable to pay an instalment of £750,000 due on that day under the Third Supplemental Extension Agreement, and by its terms he was given until 10 January 2014 to pay it and until 20 January 2014 to repay the Debt (paragraph 375 above). At the time he was in the process of attempting a sale of GGH to a purchaser called City Developments Ltd (“CDL”). The Final Supplemental Extension Agreement was entered into on 15 January 2014 after Mr Holyoake only paid £333,000 of the £750,000 on 10 January, and by its terms he was given until 14 February to pay both it and the balance of the Debt, provided contracts for the sale of GGH were exchanged by 22 January 2014 (paragraph 376 above). That was to enable him to sell GGH to the ultimate purchaser (Key Platinum). In each case, if he had not agreed the terms of the extension, the whole Debt would have become due on the next Business Day after his default (23 December 2013 and 13 January 2014 respectively), and under the terms of the relevant JMA CPC would also have been entitled to exercise step-in rights.

Are these fees unfair? Or, to be more precise, has CPC shown that the relationship was fair despite the charging of these fees? I propose to consider this question first by reference to the checklist set out by Hamblen J in Deutsche Bank (Suisse) SA v Khan at [346].

I have set all this out at length in deference to the analysis of Hamblen J, but in the end I think the position is very simple. CPC were justified in seeking an extension fee as a price for granting Mr Holyoake a further extension, which he needed in each case because he had defaulted in making payments that he had agreed he would make, and he agreed to the price CPC demanded in each case in order to buy more time to achieve a sale. It was no doubt in his commercial interest to do so. What however this analysis does not establish is whether the actual fees demanded were fair or not.

Mr Lord submitted that the Court’s role was not to regulate returns simply because they were large on their face. He referred to Khodari v Tamimi [2008] EWHC 3065 (QB) where the claimant had made loans to the defendant, a wealthy businessman who was a heavy and compulsive gambler and needed money for that purpose. The loans were for a few days or even overnight, and the claimant charged a 10% fee. The defendant argued that a 10% return on lending which might be only outstanding for a few days was manifestly unfair, but Blair J held that it was not, saying (at [46]):

“The size of the charge is plainly very large compared to the short period of the loan, but this has to be seen in the light of the credit risk assumed in making the loan, as this litigation shows very clearly.”

The Court of Appeal dismissed an appeal: [2009] EWCA Civ 1109.

Mr Lord submitted that the fee of 10% overnight would yield an annualised return of

Nor do I accept that Khodari v Tamimi is authority for the proposition that the Court’s role is not to regulate large returns, and that the mere size of the charge is not enough to attract the attention of the Court. The size of charges made by a creditor to a debtor for further accommodation seems to me to be plainly something that can be taken account of in assessing the fairness of the relationship. Indeed s. 140B(1)(a) and (c) expressly confer powers on the Court to require the creditor to repay part of a sum paid by the debtor or to reduce any sum payable by the debtor, and the obvious circumstances in which that would be appropriate would be if the Court thought that a particular charge that had been paid or was payable (a fee, or a rate of interest) was unfairly high. In giving the leading judgment in the Court of Appeal in Khodari v Tamimi Wilson LJ said (at [40]):

“these were unsecured loans to a person resident outside England and Wales; the judge accepted evidence that a fee of 10%, or even more, for loans made in analogous circumstances was fairly normal…”

It is not apparent to me on what basis Wilson LJ said that Blair J had accepted evidence that a fee of 10% was fairly normal: Blair J did refer to the evidence of a witness to this effect, but this was in the course of referring to the claimant’s submissions, and, unless I have missed it, he did not expressly say that he accepted it (see [2008] EWHC 3065 (QB) at [31]). But Wilson LJ clearly regarded such evidence as supporting the conclusion that it was not unfair, which suggests that charging a fee that was out of line with normal fees could be unfair.

In my judgment therefore it is relevant to consider whether the fees of £1m and £1.5m were unfairly large. The first secured an extension from 23 December 2013 to 20

No real attempt was made by Mr Christian Candy or Mr Dean to explain how the sums had been arrived at: in relation to the first fee of £1m, Mr Candy’s evidence was as follows:

“Q. Your position as at December 2013 at 6.16 in the morning was: "I suggest we issue a claim form, get him to pay a further extension fee of £1 million and then withdraw the claim form." A. Yes.

Q. This was, was it not, your tactic by then? You were simply getting additional sums of money from Mark Holyoake without reference to any objective criteria at all?

A.

No, my Lord. What was happening here was again Mark Holyoake, the expert at buying for time -- what he was doing is he could have taken a lower price from City Developments Limited but with his greed or whatever it was, he wanted more time. So I'm like, "If he wants more time, charge him an extension fee. If he doesn't, we will issue a claim form".

Q. It was more than that, wasn't it? Issue a claim form, get another £1 million and then withdraw the claim form?

A. Perfectly legal, my Lord.”

It can be seen that although Mr Candy denies that he was simply getting additional sums from Mr Holyoake without reference to any objective criteria, he does not explain how he alighted on the sum of £1m, nor does he seek to justify it other than that if Mr Holyoake wanted an extension he would have to pay for it and that was legal. Legal it may have been, but that is not necessarily the same as being fair.

So far as Mr Dean is concerned, he was asked about the fee of £1m, and he said that would have been in the light of the Arlington fees of £3.5m. That is a reference to the fact that Arlington was proposing to charge total fees of £3.5m (£1.5m initial fees and £2m exit fees) on a facility of £53.5m for 9 months. I do not think that Mr Dean was seeking to justify the fee by comparison with that charged by Arlington, and if he had been, it is apparent that there is little comparison with fees charged for a loan of £53.5m for a 9 month facility and fees charged for an extension of a month for a debt of what was then some £17m or so. (Interestingly, although no reliance was placed on this by either side, the Arlington facility contained provision for extension of the facility for 3 months in return for an extension fee of 100 basis points of the loan, which I take to mean 1% or £535,000). Rather, I think Mr Dean was referring back to something he had said earlier when asked about the £2m Extension Fee charged by the Second Supplemental Extension Agreement, as follows:

“Q. How was the extension fee of £2 million determined, please?

A.

I believe Arlington -- and it is in our defence – if you look at the back section of our defence there is a summary of the Arlington loan, and I think that there were fees due under that of 2 million and 1.5 million, and I'm pretty sure that the 2 million that was proposed here was simply because Mark was avoiding having to pay the 3.5 and instead was paying 2 to buy valuable time so that he could move forward with a sale.”

That suggests that what Mr Dean meant was that because Mr Holyoake would not have to pay Arlington £3.5m in fees, CPC decided to ask him to pay some of it to them instead. That tends to confirm that there was no particular science to the size of the fee other than what CPC thought Mr Holyoake would pay.

In relation to the final fee of £1.5m, Mr Dean’s evidence was as follows:

“Q. There was an extension fee of £1.5 million in relation to an extension of seven days, four working days?

A.

Yes, so that Mr Holyoake could secure a sale at a substantially higher level than he had under the CDL proposal. I don't know where the CDL price ended up, but he was being chipped endlessly in respect of rights of light and all sorts of elements.”

That explains why Mr Holyoake wanted the extension, but not why the fee charged was £1.5m.

In the circumstances I am left with little explanation justifying the sums other than that they were the price required by CPC, and no attempt has been made to show that the fees charged were in line with norms in the industry, or calculated by reference to the risks borne by CPC. If the question had been whether the extension fees were high for the extension of the loan for one month, I would conclude that they were, or at any rate that they had not been shown not to be.

But that is not the statutory question. The statutory question under s. 140A(1) is whether the Court determines that the relationship is unfair, and in assessing that the Court can have regard to anything it considers relevant under s. 140A(2). The matters that seem to me most relevant are as follows. Mr Holyoake was not a naïve consumer who did not understand what he was doing, but was a sophisticated borrower who had borrowed money for commercial purposes in order to try and make a profit from a business venture. He understood exactly what sums CPC were stipulating as the price for the extensions. He was only in the position of having to ask for extensions because of his defaults, which were the latest in a very long line of broken promises. Although he protested at the sums demanded, he agreed to them: as Mr Lord submitted, he was obviously willing to pay the price, and if he thought the price was too high, he could have refused. What he was buying was not so much credit for a few more days, but the opportunity to continue to try and achieve a sale, first to CDL, and then at a significantly higher cash price to Key Platinum (CDL’s final position had been a sale for £78m cash, with a retention of £11m until a rights of light issue had been resolved, and apartments worth £7m, whereas the sale to Key Platinum was a straight sale at £90m). That was a price that Mr Holyoake considered worth paying, and Mr Holyoake was no doubt right, as if he had not paid the price CPC required, it is doubtful if either of those sales could have been completed and there was a real risk that if CPC had sued him or exercised its step-in rights, a sale would have been much less advantageous. In effect therefore what CPC was doing, as Mr Candy effectively admitted, was taking advantage of the fact that Mr Holyoake, having failed to keep to the timetable he had agreed to, needed extensions to sell GGH, and putting a price on that which they judged, correctly, Mr Holyoake would find it commercially worth his while to pay.

In those circumstances I am persuaded, accepting that the onus is on CPC, that even though the extension fees may have been steep, the relationship between the parties was not unfair. I do not think the CCA was in general intended to enable the Court to intervene in what is effectively a commercial negotiation between parties who are well able to look after themselves.

That conclusion makes it unnecessary to consider whether I would have exercised my discretion under s. 140B(1) had I determined that the relationship between the parties was unfair. Mr Lord submitted that in that event the Court should refuse relief because of Mr Holyoake’s repeated dishonesty: cf Ketley v Scott [1981] ICR 241, a decision on the previous provisions in ss. 137-140 CCA where Foster J, having found that the interest charged was not extortionate, said he would have refused to reopen the transaction in any event in view of four deceitful acts of the borrower. Although the point does not now arise, I think it very likely that I would have taken the same view in the present case. In particular, if Mr Holyoake had not pretended that the Sherbourne contract was a Qualifying Contract, the debt would have fallen due on 1 May 2013 and CPC would have acquired step-in rights to sell GGH. It is impossible to know precisely what would have happened, but I think it is probable that CPC would have stepped in and sold GGH. That would be likely to have realised less than the ultimate sale to Key Platinum, and there would be no question of the Extension Fees of £1m and £1.5m. In those circumstances I do not think it would have been appropriate to reopen the payment of Extension Fees which Mr Holyoake would probably not have paid if he had not been deceitful about the Sherbourne contract, and which probably enabled him to realise more on a sale of GGH than would then have been the case.

I have now considered all Mr Holyoake’s and Hotblack’s claims and found none of them established. It follows that I dismiss the claim.