Sweetman v Shepherd & Ors

These applications in three discrete actions come before the Court by direction of Mr Justice Eady given on 11 October 2006. In each case the Defendants apply to strike out the Claimant’s case. Although separate, each action arises from the same factual matrix. Whilst different considerations, at least to some degree, apply to each separate case, it is helpful to begin by attempting a review of the facts which underpin them all.

It is inevitable that such a summary will be incomplete and tentative in one or more respects. There is a dispute between the Parties as to whether this case can now properly be tried: the Claimant says it can, all the Defendants say it cannot. There is a dispute between the Parties as to whether there is a sufficient quantity of the relevant documentation available for disclosure: the Claimant says it is, the Defendants say there is no such sufficiency. However it is undoubtedly the case that, even in the course of this quite extensive application hearing, only a tiny proportion of the relevant documentation could be considered. It is also worth emphasising from the outset that this case contains proven fraud and further allegations of fraud. As will become clear, even were a court to be in possession of every last contemporaneous document, there would still be the real prospect that those contemporaneous documents did not tell the complete story, or in some respects the true story.

I will consider these difficulties later in this judgment, but for now they are necessary reminders that I am reaching no conclusive view, at least for the most part, on the substantive issues in these cases. That is fortunately not my responsibility. What is at the heart of these applications is the question as to whether these proceedings can now properly and justly be tried at all, and the question of delay.

The history of these cases, complex in themselves, has involved three previous interlocutory High Court judgments, two contested hearings in the Court of Appeal and at least one trial of an associated action (the Tring Option). Even a compressed review of the facts and a summary of the procedural history will necessarily comprise a reasonably lengthy judgment.

The Claimant has at all material times been a property developer. He has specialised in options for purchase of parcels of land. He states that his normal method of operation is to spot a parcel of land with development potential, contact the owner of the land and obtain an option to purchase, and then attempt to market the land to developers. In that sense, it may be better to describe him as a dealer in land with development potential since, as I understand his case, he has not himself conducted the substantive development of land.

In the course of business, the Claimant tells us he had used Ronald Nathan, a solicitor, for legal work. Mr Nathan was senior partner in the firm of Ronald Nathan and Co, working with the other Defendants in the second named action here, Case HQOOX05431. The Claimant’s case is he had become dissatisfied with the legal service provided by Mr Nathan’s firm and had ceased to use them. However, in his witness statement of 4 October 1999, the Claimant tells us that in January 1991, he received a telephone call from Mr Nathan “out of the blue”, asking him if he was interested in a land purchase deal concerning a plot of 37 acres of moor land known as Crow Knowl, Denshaw, Oldham. This land is at the heart of the story.

As the pleadings indicate, a number of complex issues will arise. In the narrative which follows, to my understanding the facts are not in issue, save where this is indicated.

The site in question was at all times of low value unless carrying the potential for mining or extraction development. Planning permission had been granted for adjacent land, and a small portion of this site, in 1952. The permission was never exercised. No development occurred. Adjacent land achieved planning permission in 1963, but again no development took place and the planning permission lapsed.

In 1977 the site was purchased by a Mr Geoffrey Marsden. He made applications for planning permission for the extraction of rock in 1981 and 1984. Both were refused. In 1989, the Senior Planning Officer for Oldham Borough Council, a Mr Peter Taylor, wrote to Mr Marsden and his solicitors, after examining the original planning files. Mr Taylor advised Mr Marsden as to the planning history of the site and went on to tell him that any new planning application for mineral extraction would not be favourably received. The site lay within a Special Landscape Area [SLA] and open cast working on the site would be likely to have a drastic impact on the landscape.

Mr Marsden became a director of Fleet Industries Plc in 1990 and was a majority shareholder of that company. The company was a holding company, with a number of wholly owned subsidiaries. The Crow Knowl land and the affairs of the Fleet Group are connected, as we shall see, although the extent of the connection is unclear.

There were group debts, some of which comprised a loan from Selective Invoicing Discount Limited (SID). Mr Marsden acted as a guarantor for the company debts. In 1989, SID were granted a charge over the site, which was registered on 21 March 1990. In the body of the SID charge, Mr Marsden warranted that the current market value of the site was not less than £5.5m. In the course of a “Deed of Agency” of January 1990 made between Mr Marsden and one of the Fleet Group companies, Fleet Estates Limited, Mr Marsden confirmed that he held the site as agent for and on behalf of Fleet Estates, and that all his estate and interest in the site was held on behalf of that company. On 4 July 1990, a restriction was registered against the site at HM Land Registry on behalf of Fleet Estates. Thus this site formed a key security for the debts of the Fleet Group; Mr Marsden was the majority shareholder in the holding company and he had warranted to the creditors that the value of the site was very high. There is no suggestion that the value was anything like £5.5m, absent a development value in the land.

It will be obvious that these events took place a great time ago. It will equally be obvious from the short summary of events even this far, that the story may raise as many questions as conclusions. I repeat that I make no findings as to this narrative. The question at hand is whether proper findings may justly now be made. Having interjected the comment once, I will not repeat it in relation to subsequent phases of the story, although they are properly subject to the same comment.

It is said that in about June 1990, Mr Marsden instructed Mr Philip Sharrocks, a valuer employed by Churchill Properties (Surveyors) Limited in Stockport, (whom I shall refer to as “Churchill”), to value the site. It appears the valuation was based upon documents supplied by Mr Marsden and produced without an independent investigation of the planning position, of site access or of the extent of mineral deposits. Mr Sharrocks produced a written valuation dated 27 June 1990 in the sum of £4,813,272. The site was included as a fixed asset in the accounts of Fleet Industries Plc at that sum. It is the Defendant’s case, thus far pleaded by the Defendants to the legal negligence action HQ04X01432, that the Group would have been insolvent but for this asset.

One of the group companies was Pressure Control Products Limited (PCP). This was a trading company carrying on business in repairing and maintaining drilling and wellhead equipment, and supplying personnel for the oil industry. In about 1988, PCP is said to have acquired the assets of another company called Hydroflex UK Limited, from receivers, for the sum of £1,500. The Defendant’s case is those assets included 1,800 drawings called the “Sealwell Drawings”, relating to well equipment. In about June 1990, chartered engineers were asked to estimate the cost of reproducing designs and drawings for the Sealwell Drawings. They reported that the total cost of reproduction of the drawings was estimated to be £12.25m. In the financial statements of PCP for the period ending 30 April 1990, the Sealwell Drawings were recorded in the balance sheet as an asset to the sum of £8,195.000. It is the Defendant’s case that these drawings were in fact worthless.

We have seen that the site represented the key security for the Fleet Group borrowings and was charged in favour of SID by late 1989. By an option agreement dated 18 September 1990, Mr Marsden sold an option to purchase the site to a Miss Susan Shawdale, for £10. The option was to purchase the site for £700,000. This option was exercisable by notice, up to one year from the date of the agreement. The Defendants make the comment that it is problematic to reconcile this valuation of the site with the Churchill valuation of June 1990, or with the warranty by Mr Marsden that the site was worth not less than £5.5m.

By a side agreement of the same date (18 September 1990), Mr Marsden and Miss Shawdale agreed that, if Miss Shawdale sold on the site within the 12 month period of the option, the proceeds of that onward sale would be divided between them in equal proportions.

Following the option agreement and side agreement between Mr Marsden and Miss Shawdale, Mr Sharrocks of Churchills was asked to value the site again in November 1990. He made two valuations. These two valuations were in the same sum and ostensibly were both made in the same month. The site was recited as being owned by Mr Marsden. Although dated November 1990, one of these valuations was stated to have been prepared for the Claimant in these proceedings, despite the fact that his account is he was not aware of the site until January 1991. I repeat that that valuation states the site was owned by Mr Marsden. The second valuation is stated to have been prepared for the “Lending Principals of Fleet Industries Plc”. At about the same time as these valuations, the solicitors then acting for Miss Shawdale wrote on 14 November to Churchills, asking them to increase their professional insurance cover for any one claim up to a limit of £10m. Churchills complied, and on 4 December 1990, RICS Insurance Service confirmed to Churchills’ broker that cover had been effected from that day with a limit of £10m.

The suggested significance of this increase in professional indemnity insurance was made explicit in the course of the hearing. The Defendants will seek to say that this was done deliberately, in order to set up the surveyors and their insurers as potential defendants to legal action. In other words, if a vendor could not be found to pay the claimed value of the land, the surveyors could be sued as a fall back. It will immediately be clear in such a context that what was said to the valuers, particularly in regard to planning permission and mineral deposits, would become crucial in such a claim, and thus key evidence in a trial of these actions.

It is not in issue that the Claimant knew Ronald Nathan before 1990. As he makes clear in his witness statement of October 1999, the Claimant had used Mr Nathan and his firm as his solicitor for property matters for some period considerably before that.

The Claimant’s case is that he was rung up “out of the blue” about this site by Mr Nathan in January 1991. It is said that on or about 23 January 1991, a Mr Mark Bonnin who owned a property consultancy firm, introduced the site to Mr Nathan and advised him that there were “interested purchasers of the site”. I find this also somewhat curious, since if Mr Bonnin had parties interested in buying the site, then it might be thought he would maximise his profits by introducing his purchaser to someone with an existing capacity to sell the site. However that may be, it is said that he contacted Mr Nathan, who in turn contacted the Claimant on or about 23 January 1991. The Claimant then contacted Mr Bonnin, who it is said, provided him with a copy of the Churchill valuation. On 24 January 1991 a meeting took place at the Claimant’s home with Mr Bonnin and an assistant. At that point or soon thereafter, it is said the Claimant was provided with a copy of a letter from solicitors called Moore, Maiden and Co written to Mr Sharrocks the valuer and dated 17 January 1991, in which Moore, Maiden and Co stated that they acted for a Mr J Vass who had agreed to purchase, or was willing to purchase the site at a price of £10m, and that funds were available for deposit and completion. By a letter dated 22 January 1991, Moore, Maiden and Co advised Mr Sharrocks that immediate funds of £500,000 were available for the deposit on the sale. Once again, it is interesting to consider why, if that were so, Mr Vass was not introduced to those who could sell the site.

Some of the correspondence concerning this affair, and forming part of the file at Ronald Nathan and Co, was before the Court in the course of the application. It seems clear that this was not all of the documentation that was raised at the time. For example, the earliest document before the Court was a letter of 1 February 1991 from Mr Nathan to the Claimant, recording the fact that an agreement had been reached between them as to the prospective purchase of the site. At any trial, the Defendants would rely heavily on part of this letter which reads as follows:

“I [Ronald Nathan] confirm that the intention is to effect an exchange of contracts for the purchase of the land in your name for £1.5m and then to sell the land at its highest possible figure thereafter, up to prospectively £10m. I equally confirm that there is to be an agreement between yourself and the vendor of the land, or another party, or both, with regard to the division of the net profits of sale. In consideration of my introduction of this project to you, and my making arrangements for the deposit of £70,000, you have agreed that you would divide, on a 50/50 equal basis, the net profits you realise with me. ”

The Defendants rely on this letter, inter alia, as showing that Mr Nathan was not acting as the Claimant’s solicitor but rather as a business partner, and was therefore not acting through his legal partnership. In using his services for the purpose of this deal, they say the Claimant was not relying upon the existence or status of the partners in Mr Nathan’s firm. They would thus argue that those partners whom they represent, who have been described by all in the course of this case as the “innocent” Nathan partners, should not be liable for any loss, even if loss is proved. In my view, this point is a rather elegant illustration of the degree to which oral evidence would be necessary for the fair disposal of the issues in the case. Even were the complete run of documentation before a court, the full picture of this relationship would not likely emerge from the papers.

The reference to the necessary £70,000 deposit should be understood. At this point, the land was still in the name of Mr Marsden. He was the owner. Miss Shawdale had purchased an option to buy the land but in order to exercise it, she had to make a deposit of £70,000.

A meeting took place at Mr Nathan’s office on 1 February 1991. It was attended by Mr Nathan, the Claimant, Mr Bonnin’s assistant Mr Hartley and a Mr Mabon. Mr Mabon and Miss Shawdale were, apparently, a couple. A document bearing the date 1 February 1991 - ostensibly a contract for sale of the land from Miss Shawdale to the Claimant - was signed. However it was not signed by Miss Shawdale. The Defendant’s case is that this document was signed in the name “S S Shawdale” by Mr Mabon, purportedly under the provisions of an Enduring Power of Attorney dated the day before. The Defendants say this was an invalid contract, because the Enduring Power of Attorney was itself invalid, by reason of the fact that Mr Mabon was an undischarged bankrupt. It is noteworthy that Mr Marsden was not present and appears not to have been a party to this agreement. The contract for sale recites that the deposit to be paid over to Miss Shawdale was £150,000. The Defendants say this too was a misleading figure, as the correspondence makes clear. She was in fact only going to be paid the £70,000 she needed, in order to exercise her option. In any event, say the Defendants, the documents also reveal that the cash for this deposit was not provided by Mr Sweetman, but was provided by Mr Nathan from monies belonging to someone else, named Kilmartin.

In addition to the contract for sale of the site of 1 February 1991, the Claimant also is said to have entered a side agreement with Miss Shawdale. The effect of this agreement was that the Claimant and Miss Shawdale were to enter a partnership. The Claimant would endeavour to sell the site “for a minimum of £10m or the best price reasonably obtainable, such a price to be previously agreed with Miss Shawdale” and would split the profit with her. There was a further provision that if the site was not sold for £10m then

“(….if a valid claim exists) then the purchaser is to pursue a claim against Churchill Properties Surveyors Limited or their insurers under their appraisal and report dated November 1990 subject to the costs thereof being divided equally between the Parties hereto”.

The proceeds of any such claim was to be divided equally between them.

On 26 February 1991 Messrs Coutts advanced £1.6m to the Claimant for the purchase of the land. It is the Defendants’ case that this advance was obtained by fraud, to which the Claimant was a party.

The representations which are said to have been fraudulent were as follows. Firstly, both Mr Nathan and the Claimant represented that there was more than one genuine purchaser interested in buying the site. In fact, there was only one. Further, the Claimant and Mr Nathan represented to Mr Terence Brown, the relevant Manager at Coutts, that the Claimant had provided a deposit of £150,000 by surrendering part of an option over land at Tring, Hertfordshire. In fact, the deposit was £70,000, the Claimant had not provided any part of the deposit and the Claimant did not have such an option. There was in existence an option over such land, which became the subject of a judgment in a separate case in April 1997, as is summarised below. However the option was not that of the Claimant.

A further allegation of fraud in obtaining this advance, concerns a further valuation of the land. On about 11 February 1991, Coutts informed the Claimant that they wished to have independent verification of the Churchill valuation. The Claimant instructed a Mr Peter Vincent, from Smith Vincent and Co, to provide such a report. Between 13 – 20 February, it is suggested that Mr Mabon, Miss Shawdale’s co-habitee, attended Mr Vincent’s office to provide him with documentation for the purpose of the valuation. The Defendants allege Mr Mabon could only have done so, at the request of the Claimant. Mr Vincent was provided by Mr Mabon (or perhaps Mr Nathan) with a forged letter from Greater Manchester Planning Department stating that there were two planning permissions in force relating to the site and that both permissions were “free from conditions”. Even when Mr Vincent provided his report on the basis of this misinformation, it is suggested that the Claimant wanted the report to be made “more positive”. Indeed, the Claimant gave instructions to his former solicitors, now being sued by him, to this effect in about August 1995. The draft report was significantly amended before finalisation. The revised report was provided to Coutts with the forged planning letter.

On 22 February 1991, it appears that Mr Brown of Coutts told Mr Nathan that the bank would make an advance if the Claimant provided a lien to the bank over the Tring Option. On 25 February, the Claimant signed a Memorandum of Acceptance in relation to the offer of the loan, which included the stipulation of a legally enforceable lien over the Tring Option. The Defendants say he knew he could not provide this, and here they must be correct, given the judgment of Neuberger J summarised later in this judgment. On the same day, Mr Nathan provided a Report on Title to Coutts, stating that the Claimants title to the Tring Option was good and marketable. The Defendants say this was false and Mr Nathan knew it was false.

Further, on 25 February, Mr Nathan provided to Coutts a Report on Title in relation to the site itself. It is alleged that Mr Nathan, with the Claimant’s full knowledge, falsely informed Coutts that the title to the site was good and marketable, when in fact both knew that the title was subject to the SID charge and to a second charge to National Westminster Bank. Moreover, Mr Nathan had not disclosed his personal interest in the transaction as a concealed partner of the Claimant sharing in the profit, and by that concealment of interest, maintained the opportunity to act for Coutts on the transaction. On the same day, Mr Nathan gave an undertaking to Coutts to retain the money advanced until the legal mortgage over the site had been executed and the lien executed over the Tring Option. On the same day, Mr Nathan told Coutts that he was preparing the lien document. Since Mr Nathan and the Claimant were aware that he could not give such a lien, this too was a false representation. The lien was never created or signed. On 27 February, Mr Nathan wrote to Coutts telling them that the lien had been signed and a copy had been forwarded to the Land Registry. Subsequently, despite repeated requests from Coutts, Mr Nathan failed to provide any such copy lien to the bank.

I have summarised above how the land in question formed security for the debts of the Fleet Group, including PCP. Alongside the acquisition of the site, the Claimant and Mr Nathan were planning to acquire the assets of PCP, including the Sealwell Drawings. These negotiations culminated in an agreement between the Claimant, Nathan and Miss Shawdale dated 26 February 1991. The essence of this agreement was that they would cooperate in a scheme to appoint a receiver, hive down the assets of PCP and transfer them to a new company, to be formed offshore. That new company would, in turn, be wholly owned by another company, to be formed offshore. This agreement led to the payment of £20,000 to a Mr Harold Sorsky, made out of the Coutts advance, representing part payment of Mr Sorsky’s fees on his appointment as Administrative Receiver of Fleet Ltd and PCP on 5 March 1991. The agreement also led to the incorporation by Mr Nathan of “PCP Offshore Limited” on 7 March and to various other correspondence, including written agreements between Mr Nathan and the Claimant dated 14 March 1991 dealing with these arrangements. Under these arrangements, Mr Nathan and the Claimant were each to have a 25% interest in the new PCP Offshore Limited. All those arrangements are evidenced in writing. The Defendants’ case is that, if this scheme had been put into effect, it would have defrauded the creditors of PCP, since if the Sealwell Drawings were in truth worth a great deal of money, then the hive-down agreement would deprive the creditors of Fleet Group and PCP of that value. This allegation must of course be seen in the context of the transfer of ownership of the Crow Knowl site, itself the main security for the Fleet Group debts.

In fact the scheme to hive-down the assets of PCP did not proceed. Mr Sorsky resigned his appointment on 13 March 1991, because he was not willing to put into effect the hive-down scheme. The importance of all this for the Defendant’s case is not that the hive-down scheme did or did not take place. The point is more that the Claimant must have been aware of the whole picture concerning the assets and liabilities of the Fleet Group, given the proposed scheme to acquire the assets of PCP. Thus the Defendants say the whole complex story becomes relevant to these cases, when one considers who knew what, as to the true value of Crow Knowl and as to the validity of the valuations of the land. They further say that the question of who knew what cannot be determined by looking at the documents which are available. Significant reliance would need to be placed, say the Defendants, on oral evidence from those involved.

In the meanwhile, on 13 February 1991, Mr Nathan instructed Grimley JR Eve, another firm of valuers, to prepare a further valuation of the Crow Knowl site. On 18 February, Mr Nathan sent to a Mr Voden of Grimley JR Eve the forged 8 May letter from Manchester Planning Department. On 20 February, a Mr Lockwood of Grimley JR Eve telephoned Mr Taylor of Oldham Borough Council and was advised that the letter of 8 May, which it will be recalled suggested planning permission for extraction was available (or had been granted), was “a mistake”. This was before Mr Nathan provided his report on title to Coutts on 25 February. As I have pointed out, the Defendants allege this report on title was fraudulent and that the Claimant was aware of it. A key point in deciding whether that allegation is true would be to establish whether the “news” that the planning letter was “a mistake” had been passed back to Nathan and the Claimant by Mr Lockwood or someone in his office, by or before 25 February. The documents do not appear to resolve this, but the point is obviously extremely important.

Mr Lockwood apparently pursued enquiries with British Coal. Obtaining their authority was a pre-condition for the grant of planning permission for mining operations for coal. It appears that, on 10 May 1991, Mr Lockwood received a letter from British Coal stating they could not confirm there was valid permission for mining at the site, that any such mining would require a licence from them, and that such licence could only be granted if clear planning permission was obtained. On 16 May, Mr Lockwood wrote to Mr Nathan confirming that it was his understanding there was no clear planning permission relating to the site. On 20 May, Mr Nathan wrote to the Claimant enclosing Mr Lockwood’s letter. The Claimant’s response, it appears, was to ask Mr Nathan to get Churchills to admit negligence in reaching the valuation they had reached. The Defendants say that it follows from this, the Claimant was well aware before the end of May 1991 that the site did not have planning permission, knew it would be unlikely to get it and therefore knew it was in truth of very little value.

A further advance was obtained from Coutts in July 1991, secured upon the site and in the sum of £1.5m. This advance was the subject of a judgment by Conrad Dehn QC, dated 25 March 1993, given in the Chancery Division of the High Court. I will refer to this case as the “Coutts Deceit Action”. Mr Dehn found that both the Claimant and Mr Nathan were guilty of deceit in relation to this advance. Although the case was heard as a motion for summary judgment pursuant to RSC Order 14, the Claimant gave reasonably extensive oral evidence in court and was disbelieved. The essence of the alleged fraud was contained in two allegations made by Coutts against the Claimant: firstly, that he required £1.5m to buy out Miss Shawdale’s continuing interest in the proceeds of sale of the land and secondly, that he had arranged a sale of the land at £10.5m to a company known as Darvist Property Limited.

Mr Dehn recited Coutts’ case as to the first representation as follows:

“In fact, Shawdale had agreed with Sweetman in June 1991 to take £400,000, and on the 26 July to take £200,000, for her rights, so Sweetman knew the representation was false. Of the rest of the £1.5m, £525,000 went to Roberts and was then returned to Nathan by Roberts as the 5% deposit due under the contract of resale and was subsequently released by Nathan to Sweetman; £450,000 was retained by Nathan, £190,000 went to Corbett for introducing the purchaser, and the rest went to Sweetman.”

Having indicated that an unsworn Affidavit from the Claimant was introduced to the proceedings, Mr Dehn recites in his judgment how Mr Sweetman appeared in the court assisted by a friend who sat beside him, undertook to file an Affidavit submitting his unsigned statement, stating that its contents were true, and went into the witness box taking the oath and confirming the facts that he had given to the court were true.

Mr Dehn’s conclusion was to reject the Claimant’s statement, to record the Claimant’s concession that he knew Coutts had been led to believe that all of the £1.5m was to be used to buy out Shawdale but that he did not at any time tell Coutts that only £200,000 was to be used for that purpose, and to reject the Claimant’s explanation that Mr Nathan had told him Coutts need not be so informed. Mr Dehn concluded that the Claimant’s statement was “inherently implausible and inconsistent with contemporary and subsequent documents”. He found that it did not show a fair or reasonable probability of a bona fide defence and gave judgment for Coutts against the Claimant for damages for deceit, on the basis of that representation. He did not reach a conclusion on the second representation. However, summary judgment followed on the finding based on the first representation. That judgment was never appealed by the Claimant.

Having established that the Claimant was proven to be involved in fraud in relation to the second Coutts advance, it is necessary to step back and look at some of the detail of the narrative leading up to that advance.

In May 1991, through an agent called Corbett, the Claimant sought offers from potential purchasers to buy the site, indicating a price of £10.5m. The Claimant’s case is that as a result of this, a solicitor by the name of John Roberts, who was then a partner in the firm of Shepherds Solicitors of Birmingham, became interested in the property. The other partners in this firm are the “innocent” Shepherd partners, sued in the first-named action above, numbered HQ04X03554. Mr Roberts had a controlling interest in a substantial property development company called Darvist Property Limited. On 13 May 1991, using the notepaper of Shepherds Solicitors, Mr Roberts put forward details of Darvist Property Limited as a proposed purchaser of the land in the sum of £10.5m. On 16 May, Mr Roberts confirmed that Shepherds were instructed on behalf of Darvist and that he awaited a draft contract.

It will be recalled that it was on 20 May 1991 that Mr Nathan wrote to the Claimant enclosing the letter from the surveyor Mr Lockwood, making it clear that there was no planning permission to develop the site for mining and that such permission was unlikely to be obtained. Mr Nathan concluded this letter to the Claimant by saying that “quite frankly I do not know where to go from here without stirring up too much at this time”. It is the Defendants’ case that a positive decision was then taken between the Claimant and Mr Nathan not to inform Coutts Bank of these difficulties.

It is also the Defendants’ case that it was at this point the Claimant made real efforts to persuade Mr Brown of Coutts Bank to advance further money, and indeed that was part of the unchallenged findings of Mr Dehn QC. On 28 May 1991, the Claimant faxed the agent Mr Corbett asking for written confirmation that Darvist had the money available to purchase the land at £10.5M. On 29 May, Mr Roberts wrote on Shepherds notepaper confirming that funds were available to proceed with the purchase. On 11 June 1991, Mr Roberts sent Nathan and Co. a draft contract with a covering letter from Messrs. Shepherds and noting that the matter was to proceed. However the name of the purchasing company inserted into the draft contract was “Darvis Property Company Limited”, that is to say the letter “t” had been dropped off the end of the first word of the company name.

This was not an oversight on the part of Mr Roberts. On 26 June 1991, he caused an “off the shelf” company known as Ample Success Limited to be incorporated and on the same day the name of that company was changed to “Darvis Property Limited”. The “Darvist” company had substantial assets and proven track record. Any searches or enquiries against that name would have revealed those facts. However clearly the situation with the newly formed “Darvis” company was entirely different: it had no assets and no track record.

On 16 July 1991, Mr Roberts wrote to the Claimant personally on Shepherds notepaper confirming that:

“we hold building society cheques payable to us [meaning Shepherds solicitors] which total the purchase price of £10.5m…..we understand that you need this information to assist you in other matters ……”

The Claimant forwarded that letter by fax to Mr Brown of Coutts Bank on 18 July 1991. According to his unsigned statement, the contents of which was adopted in the course of the hearing before Conrad Dehn QC, the Claimant stated that he was told by Mr Nathan it was the contract for sale to Darvist Property Company Limited which was essential for the advance of the further £1.5m by Coutts. The Claimant said that he had a good deal of contact with Mr Corbett, the agent, and that he relied upon Coutts Bank’s assurance that Darvist Property Company were a strong company.

On 23 July 1991 Mr Nathan faxed the Claimant telling him that “your prospective purchasers are now ready to exchange contracts” and also telling him that he had been negotiating with Miss Shawdale to reduce the price for buying out her interest. It was at this point in the sequence that negotiations led to Miss Shawdale dropping her price to sell out her interest in any further development or sale for £200,000. The Claimant acknowledges that he did sign a letter to Coutts Bank stating that the £1.5m was needed to buy out this interest, even though this was “inaccurate”. Darvis exchanged contracts with the purchase of Miss Shawdale’s remaining interest on 26 July 1991, on the same day as Coutts Bank advanced the further £1.5m to the Claimant, payment being made to Nathan and Co. On the same day, and on the instructions of the Claimant, Nathan and Co. advanced £525,000 to the Shepherd’s Client Account which Mr Roberts returned to Messrs. Nathan and Co. as the deposit of £525,000 payable on exchange of contracts to buy the site. Thus the Coutts loan obtained by the Claimant had financed the purchase by Mr Roberts’s shell company Darvis. I find this very curious. If the Claimant believed that his purchaser was Darvist Property Limited, a substantial property development company, why did they need him to finance their purchase of the land?

The Claimant transferred £250,000 to Miss Shawdale to buy out her interest in the land, plus £50,000 for her to pay to a man called Hartley, by way of commission for introducing the Claimant to her. The Claimant paid £200,000 to Mr Corbett as the first part of the commission of £1million agreed to be due to him for the introduction of Darvist, all of those payments leaving about £525,000 in the hands of Mr Nathan and for the benefit of the Claimant. The contracts for the purchase of the land by Darvis stipulated a completion date on 26 November 1991 but were never completed.

The Claimant made no repayments in respect of the monies advanced by Coutts, under either the first or second advance. Neither Darvist nor Darvis completed any transaction in relation to the land or made any payment to the Claimant. The Claimant never gave Coutts a lien over the Tring Option. The first advance was repayable no later than 26 February 1992 and the second advance was repayable earlier, no later than the end of November 1991. On 15 April 1992, Coutts demanded immediate repayments of the amounts outstanding in relation to both advances which by then, including interest, had reached the sum of £3,498,364. Coutts began legal action on the debt on 9 September 1992 (“the Coutts Debts Action”) and by separate proceedings sued this Claimant, Mr Nathan, Nathan and Company, Mr Roberts and Shepherds Solicitors, in an action for deceit commenced on 23 September 1992 (“The Coutts Deceit Action”). On 25 September 1992, Coutts issued proceedings against two firms of valuers in relation to the surveys on the site those being Messrs. Churchill Properties Surveyors Limited and Smith Vincent and Co. (“The Coutts Valuers Action”). This case was based on negligence, not deceit. Finally, Coutts issued proceedings in negligence against Mr Nathan and his firm on 27 November 1992. (“The Coutts Solicitors Negligence Action”).

Although Coutts achieved judgment against the Claimant in the debt action they failed to make any recovery under this action.

It was the Coutts Deceit Action that was brought before Conrad Dehn QC in March 1993. By that time, three of the “innocent” Nathan Partners had been bankrupted on their own petition, at least in part by reason of their liability as partners in respect of this debt. The Coutts claims exceeded the firm’s insurance cover. As we have seen, the Judgment by Mr Dehn QC was issued in respect of the second Coutts loan in the sum of £1.5m as against the instant Claimant Mr Sweetman, Mr Nathan and Messrs. Nathan and Co.

Mr Nathan was made bankrupt on Coutts’ petition on 28 July 1993 and the Claimant was made bankrupt on Coutts petition on 28 October 1993.

It is not possible for me to find with any confidence what were the accurate figures in the Claimant’s bankruptcy. Different figures appear in different documents. A “Summary of Bankrupt’s Assets and Liabilities” was made by the Official Receiver dated 30 November 1993, which set out a deficiency of £4,274,221. A list of creditor claims, dated 30 May 1997 but unsigned, gives a total for creditors claims of £6,917,868.64. In that schedule, the debt to Coutts and Co. is said to stand at £4,268,448.12. Yet, the earlier summary of Bankrupt’s Assets and Liabilities which gave the figure of £3,363,637 as the shortfall on Crow Knowl, confirmed that at that point, the bank had recovered £750,000 by way of an interim payment from one of the professional advisers concerned. It appears likely that no credit was made for that payment in the bankruptcy calculation.

Jumping ahead in time a little, in a letter of 15 April 1996, written by solicitors for Coutts to an officer in the City of London Police Fraud Squad, the recoveries were summarised. The letter recited that Mr Sweetman:

“….is of course bankrupt. As far as I am aware, there have been no distributions in his bankruptcy. The land at Crow Knowl remains unsold but subject to an offer of £10,000”.

The letter went on to recite that £2.1m had been agreed in settlement with the Solicitors Indemnity Fund in respect of the claim in deceit on both advances. There had been no recovery from Mr Nathan personally, who was a bankrupt. The Solicitors Indemnity Fund had agreed a payment of £475,000 in respect of the liability of Shepherds Solicitors. Mr Roberts had made a payment of £15,000 without admission of liability, which under the terms of the settlement with the Solicitors Indemnity Fund, had been remitted to them. There had been a settlement in respect of the first Coutts advance with the valuers Smith Vincent and Co., “on terms which are confidential”. Finally, the letter recites that there was “a limited amount of insurance cover in respect of which my client was entitled to claim in respect of the second advance” and the amount recovered under that policy was £249,767.50. The letter suggests that in respect of both advances, allowing for accrual of interest on a simple basis, £866,000 odd “remains due”. However, there is no suggestion that Coutts are seeking any more, and the Claimant’s case is that their debts have been wholly satisfied.

As I have indicated, the City of London Police mounted a fraud prosecution against the Claimant and Mr Nathan. The trial began at the Central Criminal Court in April 1996. Mr Nathan was convicted on 26 June and the Claimant was acquitted. The Claimant achieved his automatic discharge from bankruptcy on 28 October 1996.

On 30 January 1997, the Claimant issued a Writ against Ronald Nathan and his Partners. He had instructed Messrs. Russell Jones and Walker as his solicitors in that action and they in turn instructed Mr Angus McCullough as Counsel. This team of lawyers have subsequently become Defendants in the Claimant’s action for negligence against them. This is the third named-action above, numbered HQ04X01432. It is not now disputed that this Writ was defective, because the Claimant had not sought or achieved assignment from his Trustee in Bankruptcy of the Right of Action. We have therefore throughout the hearing referred to the first action against Ronald Nathan & Co. as the “Lost Action”.

Given that the allegations in the Lost Action against Mr Nathan, and by vicarious liability his partners, related to events in January and early February 1991, the Writ in the Lost Action was issued immediately prior to the expiry of the limitation period. It is the Defendants’ case that any proceedings against any of these substantive Defendants (as opposed to the Defendants in the legal negligence action) if they were valid, could and should have been issued during the period of bankruptcy. There was no need to wait until the bankruptcy had ceased. As I understand the practice, an agreement as to the assignment of a Right of Action on terms as to a division of any proceeds of the action between the bankrupt and his creditors, could be reached as easily before the discharge of bankruptcy as afterwards.

The next relevant event chronologically is the judgment of Mr Justice Neuberger given on 16 April 1997 in the case of Eggleton –v- Ashridge Investments Limited and Others. The claimant in the instant actions, Mr Keith Ivan Eugene Sweetman, was the fifth defendant in that case, and his son Mr Keith Nicholas Eugene Sweetman was the sixth defendant. The action was taken in the name of the owner of the land at Tring, in respect of which this claimant had stated he had an option to purchase. The facts in that case are as convoluted, or almost as convoluted, as the facts in the cases which have come before me. In short, Mr Justice Neuberger (as he then was) had to deal with eleven options, or apparent options, over the Tring land. His conclusions were:

“I propose to declare that the options the subject of these proceedings are forgeries. In the event of the eleventh option not being a forgery, I would have been prepared to set it aside in equity.”

It was also a finding that the “Keith Sweetman”, in respect of whom the successive options were made out, was in fact the son not the father. It follows from the findings in the Eggleton case that the instant claimant never had an option on the land in Tring and the option in favour of his son was a forgery.

On 23 July 1997, the Claimant’s trustee in bankruptcy assigned the relevant causes of action to the Claimant. The Deed of Assignment records that:

“The Trustee …..does not himself wish to bring proceedings in respect of the Causes of Action ….”

Under the terms of the assignment, the assignee, that is to say the claimant, is obliged to pay 35% of the first £4 million of any proceeds of actions assigned to the trustees in bankruptcy. If the proceeds exceed £4 million, then 50% of such excess goes to the trustee. The assignment is in relation to the causes of action against the two firms of solicitors, Ronald Nathan and Co. and Shepherds, as set out in Draft Statements of Claim annexed to the assignment. Two days after the assignment, on 25 July 1997, two Writs were issued, one against each firm. In each case, it was agreed that the Writ was issued within one day of the expiry of the limitation period. I shall hereafter refer to the Writ against Nathan and Co. simply as the “Nathans” Action and similarly the other case as the “Shepherds” Action.

In each case, the Writ was served very close to the end of the period of 4 months, provided for service. In the Nathans Action the Writ was served on 14 November and in the Shepherds Action on 18 November of 1997. These actions are two of those in respect of which the Defendants apply for an Order that there should be no trial and the actions should be struck out. The relevant events took place in 1991. In each case, proceedings were begun right at the end of the limitation period in 1997. The Writ was served in each case at the end of the period for service. In each case no Statement of Claim accompanied that Writ although, as I have pointed out, in each case a draft Statement of Claim was before the trustee in bankruptcy before assignment of the actions. As we shall see, in each case it is agreed that the pleadings have not been closed and are not in a final state a decade after the issue of proceedings. In neither case has disclosure taken place.

From this point in time, the procedural history of the Nathans Action and the Shepherds Action diverges and I will deal with them separately. It is worth recording here that the earlier action issued by Russell Jones and Walker against Nathans – the Lost Action – was struck out as a nullity by Stanley Burnton J on 22 November 2002. There has been no challenge to that finding, nor could there be. This surfaces as part of the procedural history which follows.

It is worth beginning by alluding to the historic representation of the Claimant. He was represented initially by Russell Jones and Walker. As we shall see, a notice of change of solicitors was served on 11 May 1998 in both the Nathans and Shepherds Actions, the Claimant’s new solicitors being Sternberg Reed Taylor and Gill. Although the Claimant has changed firms of solicitors on at least two occasions since then, he has done so as the solicitor with conduct of his cases, Mr Lawrence Sternberg, has moved firms. In other words, the Claimant has had consistent representation in these cases since at least May 1998.

In fact, in paragraph 1 of his witness statement dated 15 December 2006, Mr Sternberg himself says that he has personally acted for Mr Sweetman in this litigation since 1997. This may be an error, since in paragraph 29 of the same witness statement Mr Sternberg tells us that the withdrawal of instructions from Russell Jones and Walker and instructions to him took place on 28 April 1998. I infer that either the date in paragraph 1 is an error or Mr Sweetman was receiving advice from Mr Sternberg for a period before he formally withdrew instructions from Russell Jones and Walker.

In paragraph 28 of his witness statement of December 2006, Mr Sternberg tells us that on 6 February 1998 the Nathan Partners had written to the Legal Aid Board submitting that the Claimant’s legal aid should be withdrawn, because of the fraud finding in the Coutts Deceit Action. As a result of those representations the Claimant’s legal aid was withdrawn in relation both to the Nathans Action and the Shepherds Action on “about 17 April 1998”. Mr Sternberg tells us that the Claimant has not had legal aid since. Thus the switch to Mr Sternberg, as the solicitor with conduct, happened at the same time as the end of public funding. The Claimant cannot of course complain about the end of legal aid, in the absence of any effective challenge to the decision of the Legal Aid Board. However, I bear in mind the practical point that from that time the Claimant has had to fund all legal proceedings himself.

It is worth bearing in mind some of the circumstances surrounding the end of legal aid, and the conclusions of those who reviewed the case in 1998. Firstly, the Claimant’s then solicitors, Russell Jones and Walker, were apparently not made aware of the Dehn judgment by their client. The existence of this judgment was revealed to them by correspondence from the solicitors for Shepherds. When they took this up with their client, he told them he had completely forgotten about the Coutts Deceit action, and that this was because it was only a five minute hearing. In fact, the hearing lasted at least two days and the Claimant had appeared in the witness box and given a significant amount of evidence.

When the Legal Aid Committee reviewed the position in relation to the Nathans actions, (at this stage the Lost Action and the Nathans Action, in our terminology) in an appeal against the discharge of legal aid as long ago as November 1998, they turned down the appeal. They considered the action had insufficient prospects of success and gave the following reasons:

“(1)

there was a lack of evidence as to what enquiries were made by Nathan and Co leading up to the exchange of contracts;

(2)

the Committee were concerned about the applicant’s credibility having regard to the judgment in the Coutts’ case;

…….

(4)

having regard to the doubtful prospects as weighed against the potentially high costs and risks of this litigation…”

The Nathans Defendants make various criticisms of the conduct of the case by the Claimant between 1997 and 2002, covering the period of transition from Russell Jones and Walker to Mr Sternberg. The Defendants point out correctly that the action was begun at the absolute eleventh hour and suggest that it could well have been begun much earlier. The Defendants say that the bankruptcy, even whilst current, was no bar to proceeding with the action. The Claimant’s position is that even if the bankruptcy was no bar, the criminal proceedings continuing until 1996 effectively prevented the issue of civil proceedings. The Defendants reply that proceedings could and should have been issued and could have been progressed to the point of pleading, even if there would inevitably have come a stay on the action until the criminal proceedings were complete and documents and freedom of action restored.

In my judgment, it would be hard to criticise a claimant for failing to issue civil proceedings during the currency of a criminal prosecution which turned on many of the same facts. There is not only the question of difficulty of conduct of the proceedings whilst a criminal trial is pending or ongoing. There is also the difficulty of what to plead vis a vis Mr Nathan and his partners, when Mr Nathan was a co-defendant in the dock. I therefore reject criticism of the speed of conduct of this action until after the jury acquitted the Claimant and convicted Mr Nathan at the end of June 1996. Indeed, it would be inevitable in my judgment, even were matters to be promptly and properly handled, that there would be some months delay after the verdict. Papers would have to be obtained, in some instances from the police and prosecuting authorities, and in some instances from other sources. Even a prompt claimant would probably be seeking advice and support from solicitors and counsel and, specifically, seeking advice about the prospects of action against the Nathan Defendants or others. Such a claimant, even if acting promptly, would also be resuming normal life and commercial life after the distractions and burdens of criminal investigation and a long criminal trial. In addition, the Claimant was still a bankrupt and would have had many legitimate problems to deal with on that front. An assignment of the right of action would have to be obtained, whether that process was beginning before the discharge from bankruptcy or after.

For all those reasons, it seems to me inevitable that even with reasonable promptness, proceedings against the Nathan Defendants, properly founded on the assignment of the cause of action, would probably only have been issued towards the end of the limitation period in the early summer of 1997. Whilst it might have been slightly in advance of 25 July 1997 I do not find any material delay before then.

However, it is worth bearing in mind the obligations of a Plaintiff, as the Claimant then was, under the Rules of the Supreme Court as then applied and in the light of contemporaneous authority. RSC Order 25 and the notes attached to the Order taken together with authority, particularly Birkett –v- James [1978] AC 297, made two general propositions clear: firstly, conduct of the action was the responsibility of the plaintiff and secondly, time elapsed before the issue of a writ within the limitation period could not of itself constitute inordinate delay, but the later the plaintiff started his action, the higher his duty to prosecute it with diligence.

The Defendants then complain that after the issue of the Writ in the Nathans Action towards the end of July 1997, the Claimant used nearly the whole of the four month period allowed for service before the Writ was served. They further complain that the period for service of a Statement of Claim under RSC Order 18 Rule 1 expired on 18 December 1997 and the Statement of Claim was not served by then. The Claimant replies that use of the period allotted for service of the Writ cannot be a criticism. That is particularly so given that the Claimant’s then solicitors believed that the second Writ was merely precautionary, since they had not fully accepted the defect in the first Writ. The Claimant also suggests that it cannot be a material criticism that a Statement of Claim in the Nathans Action was not served in time, given that Statement of Claim had been served in the Lost Action. Subject to the recital of the assignment of the action from the Trustee in Bankruptcy, this adequately particularised the Claimant’s case in the Nathans Action.

In my judgment, there is much in these arguments. It would be harsh to hold any delay against this Claimant as to the conduct of this action, through to the time when Mr Sternberg took over the proceedings. From the point on 25 July 1997 when Russell Jones and Walker issued the Writ in the present Nathans Action there was a potential conflict between that firm and the Claimant. Even if Russell Jones and Walker hoped to achieve a result for Mr Sweetman in the form of a satisfactory settlement, they must have been aware that there was a potential professional negligence problem, which represented a possible conflict between them and their client. In my view, it would be wrong to lay any criticism at the door of this Claimant for delay during such a period, at least without detailed evidence as to the advice from solicitors to client and instructions from client to solicitors. No one has laid the groundwork for such an examination in evidence, nor have I been given really detailed submissions as to those matters in this period. Whether or not Mr Sternberg was advising the Claimant in parallel with Russell Jones and Walker over some of this period, the matter was only transferred to him in mid May 1998. I bear in mind that it was not merely the Nathans Action but also the Shepherds Action which was transferred to him. Assuming for the moment that there was no extended lead-in period to his instruction, it was again reasonable and indeed inevitable that a fresh solicitor would take some time to get to grips with litigation of this complexity. In my view, that would be likely even with reasonably prompt attention, to take several months.

However, Mr Sternberg and his client did have to bear in mind their obligations to get on with the case. Over the middle of 1998, the new solicitor was getting to grips with litigation which turned on events fully seven years previously. The duties of a Plaintiff were clear. Mr Sweetman and his solicitor had to be ready to press on promptly by the autumn of 1998. These cases required decision and impetus.

A considerable body of documentation from the criminal trial had been assembled by Russell Jones and Walker and went from them to Mr Sternberg’s firm at the time of the transfer of instructions. A schedule of criminal exhibits has been before the Court, which is missing the first page, but demonstrates that a fairly full documentation about all these events, and in particular about the matters comprised in the Nathans Action, was then available. These exhibits included, for example, tapes of interviews with Mr Sweetman and Mr Nathan from 1993, a full run of the exchange of correspondence between Nathans, Shepherds, Coutts Bank and the Claimant from 1991, what appears to be a large quantity of documentation concerning the various surveys and valuation reports, exhibit NW/9 which is described as “4 lever arch files of documents relating to Crow Knowl” and which comprised more than 1400 pages of documentation, a further file of documentation described as “bag of documents taken from Sweetman relating to Crow Knowl” and which consisted of more than 400 pages of documents; a file of documents taken from Mr Sweetman’s office; an item which is simply described as “Sweetman’s client files from solicitors Ronald Nathan” and which is 400 pages long and a file of 100 pages in length which was in fact the office file from Miss Susan Shawdale’s solicitors.

In addition, I was told in the course of the hearing – and there was no suggestion that the information was incorrect – that a considerable quantity of notebooks from the trial were handed over, which included the cross-examination of at least some of the key witnesses at the trial. The police statements were available and the schedule of them has been provided to me. It is also clearly correct that in 1998 it would have been possible to obtain transcripts of all or any of the evidence in the criminal trial which had taken place two years before. It follows that in 1998, there was ample material from which the Claimant’s lawyers could work. If it needed supplementation by way of the transcript from the trial, that could have been obtained. As we shall see later, when he came to sign a statement as to standard disclosure on 27 September 2004, the Claimant stated that he no longer had in his control:

“1.

Many documents in the Central Criminal Courts Exhibits and the listed unused documents taken by the police and not returned. I do not know whether others were taken but never listed.

2.

The originals of documents which I sent to other people.

3.

Other documents which have been destroyed, lost or returned to their originators.”

Very shortly before the transfer of instructions away from Russell Jones and Walker, and in the immediate aftermath of the discharge of the Claimant’s Legal Aid Certificate, the Defendants in the Nathans Action had informed Russell Jones and Walker of their intention to seek a summons to strike the action out. In fact, the Defendants took no such step for a good deal of time. From the papers before me, there was no correspondence at all or between the Parties between 13 May 1998 and 29 April 1999, when Mr Sternberg informed the Defendants’ solicitors that the Claimant was represented by the firm to which he (Mr Sternberg) had moved. This letter prompted a reply from the Defendants, pointing out that there were still two parallel proceedings against them (the Lost Action and the Nathans Action) and that no Statement of Claim had been served for the Nathans Action. Despite chasing letters in May, June, July, and October 1999 the Claimant took no step in the action. On 17 April 2000, Mr Sternberg told the Defendants that “our client has decided to proceed against your clients in respect of both actions”. Mr Sternberg indicated that the Claimant would be applying for a Case Management Conference. That letter was dated 17 April 2000. It should be noted that Mr Sternberg was giving a specific indication using the Action numbers of both the Lost Action and the Nathans Action.

On 18 April 2000 applications were issued ex parte for directions and an ex parte hearing took place before Master Trench, who ordered that the Civil Procedure Rules were to apply to both these claims and allocated them to the multi-track. However, the Claimant did not do anything more to progress these cases. On 14 August 2000, the Defendants wrote suggesting that the actions must automatically have been stayed under Part 51 of the CPR. It was only in response to that letter that the Defendants were told of the directions which had been made. A Case Management Conference for the attendance of both parties was then obtained for 23 October. No Statement of Claim had yet been served in the Nathans Action. On 20 October Mr Sternberg sent a letter to the Defendants enclosing “herewith a copy of our client’s Statement of Claim which would have been served upon you by our predecessors Russell Jones and Walker”. In other words, the Claimant had not amended or redrafted the Statement of Claim which had been prepared before the transfer of instructions in the spring of 1998. Such a pleading was amended and served on 26 October 2000. The defence was filed on 27 November 2000.

However the action then once more went to sleep. The Claimant did nothing more until 17 August 2001 when Mr Sternberg wrote once more to the Defendants’ solicitors indicating that he had again changed firms and enclosing a Notice of Change of Solicitors and proposing a further Case Management Conference.

The Defendants’ solicitors replied on 6 September 2001, agreeing that there should be a further Case Management Conference and proposing the outline of a further timetable. They also indicated that they were aware that in the Shepherds Action an application for security for costs was pending on 31 October 2001. The Nathan Defendants indicated that they believed such security would be appropriate in the Nathans Action also. Mr Sternberg replied on 13 September 2001, agreeing to directions proposed and indicating resistance to any application to security for costs. The Defendants replied on 9 October 2001 asking the Claimant to reconsider providing security for costs “failing which we will consider making an application to court”. There is no indication that anyone did anything for many months following that letter. The next step taken by either party to the Nathans Action was a letter of 17 April 2002 from Mr Sternberg to the Defendants solicitors proposing once more to “amalgamate” the Nathans Action and Shepherds Action into one action and indicating that it was the Claimant’s intention to apply for two separate Case Management Conferences to that end.

17 April 2002 was approximately 11 years on from the events which were the subject of this case and very nearly 4 years on from the first instruction of Mr Sternberg. It was 3½ years from the point in the autumn of 1998 when, in my judgment, the case required active progress on the part of the Plaintiff, as he then was. The Claimant had not even discontinued the Lost Action, the origin of which he says arose from a piece of obvious negligence from Messrs. Russell Jones and Walker. A defence in the Nathans Action had been served on 27 November 2000. That defence raised a limitation defence, made allegations of fraud reliant on the Dehn judgment and raised other points which taken together meant, say the Defendants, that the Claimant had an obligation to serve a Reply. I agree with the Defendants on this. No Reply was forthcoming.

The Claimant’s answer to this point is to suggest that no Reply was needed but to concede that, if it was not, the next step was Disclosure. The Claimant says he did not deal with Disclosure “because he was dealing with the provision of security for costs in the Shepherds Action”. I do not accept this as a valid excuse. It might be so if the Claimant had made a clear effort to join both these proceedings together and case-manage them together. In fact what happened throughout the year 2001 was inactivity, and this continued for some months of 2002. Although both Parties have responsibility to keep litigation on track under the CPR, in my view any court looking at the state of this case in 2002 would rapidly conclude the primary responsibility was that of the Claimant, who should have been pleading further, who was involved in the parallel sets of litigation and thus, setting aside any other consideration, was in a much better position to initiate proper case management if they were to be coordinated or consolidated. The Claimant, moreover, had control and possession of the key documents for disclosure.

The next step taken in this case was a request for further information served by the Claimant on 17 April 2002, which was met with reasonable promptness by the Defendants on 28 May 2002. The Claimant submits that some of these responses were not adequate, but there is no evidence that they pressed this point at the time.

On 3 July 2002, the Defendants issued their application for summary judgment, directed both at the Lost Action and the Nathans Action. It was this summons that led to the hearing before Stanley Burnton J in November 2002 and to the judgment to which I have already made reference. It should be noted that the Judge did strike out the Lost Action and entered summary judgment against the Claimant in the Nathans Action. It could hardly be said in those circumstances that the Defendants’ summons was wholly misconceived or an inappropriate step. The Claimant did not concede the position on the Lost Action in advance of the hearing. The Judgment of Stanley Burnton J was appealed, by a Claimant’s notice of 6 December 2002 and the appeal was allowed by the Court of Appeal on 25 July 2003. I shall look in a moment at the terms of the decision of the Court of Appeal, but first it is appropriate to consider the period between the issue of the summons by the Defendants in July 2002 and the Court of Appeal hearing at the end of July 2003.

Clearly, it would have been wrong to waste costs on further procedural steps in the action over that period. There can be no criticism of either side for not progressing the case other than was necessary for the summons and the appeal. However, this extra year of time should have made any party to this action who was considering it realise that, if the action survived, it would be extremely elderly and would need really rapid progression, if it was to be tried justly. It should also be noted that the Claimant was in breach of directions in the period running up to the Court of Appeal hearing. His application for a Stay of Execution from the Order of Stanley Burnton J was made the subject of an unless Order on 2 April 2003, due to his failure to comply with Court directions. The Claimant was not even moving this case along efficiently when he was apparently in the last ditch. There is no evidence that this added to the delay over all in the case, but it does tell us something about the Claimant’s approach.

The Court of Appeal in the Nathans Action allowed the case to proceed, following argument which concentrated principally on whether the Dehn Judgment rendered the proceedings an Abuse of Process and on the question of whether the Claimant had sustained any loss. It is worth quoting some short passages from the judgment of the Court which was delivered by Lord Justice Schiemann:

“75.

Therefore, bearing in mind the way the point on loss was raised and the total obscurity in relation to the relevant facts, [emphasis added] we have, after some hesitation, come to the conclusion that it would be wrong to strike this action out on the basis that [it] is not arguable that Mr Sweetman suffered some loss as a result of Nathan’s negligence.

76.

Nevertheless, we agree with all those who have previously considered this problem, that the chances of Mr Sweetman ultimately succeeding in this action are wholly unclear[emphasis added]. The Defendants have been disadvantaged in costs by reason of Mr Sweetman’s resiling from concessions previously made and in principle we think it right that he should give security for the Defendants’ costs in an amount that he can afford. That can be determined by the costs Judge.”

It was on that basis, that the Court allowed the appeal.

Following such a decision, any reasonable Claimant would realise there was an immediate obligation to deal with the question of security for costs: the case could not continue otherwise. It should also be clear to any reasonable claimant that the case had survived only “after some hesitation” and that the Court of Appeal had been critical of the way the Claimant had managed the case to that point. The lack of evidence and the obscurity as to the facts were also pointed out in the judgment. In my judgment, all this added to the already considerable burden on the Claimant to get the case in order and to get it moving.

It is common ground that leading counsel then acting for the Claimant, Mr Hodge QC indicated that the case needed to be re-pleaded so as to make clear how the Claimant put his claim on loss. This has never yet been done.

No agreement was reached as to security for costs. The Defendants sought directions from Master Rose, who gave such directions on 21 January 2004. They included a detailed statement of means from the Claimant. He failed to meet the deadline for service of such statement of means at the end of February. No excuse has been offered for this failure by the Claimant. On 8 April 2004, Master Eyre directed that unless the Claimant served his statement of means by 27 April, his action would be struck out. This order was complied with on the very last day. Again, in my judgment, this indicates the Claimant’s attitude towards his obligations. On 10 May, the Defendants made a request for further information as to the Claimant’s means. The Claimant failed to provide any of the further information sought. On 24 May, Master Eyre made an order requiring the Claimant to answer the great majority of requests for information. After further directions a deadline for service of this information was set at 19 July 2004. The Claimant missed this deadline, serving his answers four days later on 23 July. The Defendants complain, correctly, that this was more than 2 months after the expiry of the deadline set by the Order of 8 April, which itself had been extended from the date in January as a result of the Claimant’s delay.

As I have said, there was no reformulation of the Statement of Claim as to loss, as had been specifically indicated by Mr Hodge QC. Mr Hodge was one of a large number of successive counsel employed by the Claimant. Whilst he has now become a Judge, he did not do so for a year or so after the Court of Appeal hearing. It follows that the failure to amend the claim did not arise from an absence of experienced counsel, well-read into the case. On 27 September 2004, the Defendants obtained from Master Eyre a direction that the Claimant file and serve a properly detailed draft reply by 25 October. The Defendants argue, with some justification, that such a reply should have been served pursuant to the Directions Order of 23 October 2000. The Claimant denies this, arguing that no reply was needed, but in my view this argument sits very ill beside the indication or concession made by Mr Hodge following the hearing in the Court of Appeal.

The Claimant did provide security for costs in the sum ordered and paid £10,000 on account of the Defendants’ costs of the security proceedings. If he had failed to do so, the action would have been struck out. However, on 5 November and then on 10 November 2004, in orders which brought all these actions into alignment, the Master concluded that the draft replies served in this action (as in the others) were insufficient. Master Eyre went on to order that:

“There is accordingly reason to conclude that the action amounts to an abuse of process”.

He ordered a stay in this case until further order. Having reviewed the history of the Nathans Action to the point where it may be said to have converged procedurally with the other two, it will be helpful to look at the history of the other actions and bring them to the same point.

The factual background and procedural history relevant to the Shepherds Action is identical to that in the Nathans Action, up to the point when the Writ was issued on 25 July 1997, the day before the expiry of limitation. It will be recalled that the nub of this action against the “innocent” Shepherd’s Partners is that their partner Mr Roberts fraudulently substituted “Darvis” Property Limited for “Darvist” Property Limited as proposed purchaser of the land at Crow Knowl; that Roberts was a director of “Darvist” and had formed “Darvis”; that the representations to the Claimant by Shepherds Solicitors supporting the substantial nature of the Darvist Property Company constituted representations that Darvist was the vendor, had the funds to complete the transaction and would complete the transaction. It is contended that in the alternative, Shepherds had an obligation to satisfy themselves that the “Darvis” company was good for the sale. It is contended that the Claimant only sought and obtained the second Coutts loan in reliance on the Darvis/Darvist purchase contract.

Having issued the Writ on the last possible day, the Statement of Claim was served one week before the expiry of the 4 month period. Following the Defendants’ representations concerning the Claimants legal aid, there was a general extension for the service of a defence which was continued incrementally until 18 June 1999. Thus no complaint is made by the Defendants of time spent to that point. However, it must have been clear to all parties from that point onward (as I have already made clear in relation to the Nathans Action) that the case was already very old, and required to be moved on swiftly. It is also the case in relation to the Shepherds Action that a change of solicitors had been notified on 11 May 1998 and that Mr Sternberg has had conduct continuously since that point.

The Defence in the Shepherds Action is fairly brief, but it makes a specific allegation of fraud against the Claimant on the basis that if Roberts was acting fraudulently “…..then he was doing so in concert with and with the knowledge of both the Claimant and Nathan” see Defence paragraph 3. The Defence goes on to allege that the Claimant’s application to Coutts Bank for the second advance involved fraudulent misrepresentations on his part, recited the Dehn Judgment and relied upon an estoppel preventing the Claimant from challenging the decision of Conrad Dehn QC. The Defence went on specifically to aver that the Claimant “….did not believe that the supposed purchase of the property was a substantial company with the means to pay the supposed purchase price from its own resources” and relied upon the arrangement between the Claimant and Roberts that £525,000 of the advance was to be transferred to Roberts in order to be used as a “deposit for the supposed purchase transaction”.

It follows that, in my judgment, clear allegations of fraud were made against the Claimant by this Defence. In argument before me, the Claimant has argued that this defence was brief and “essentially puts the Claimant to proof of his allegations. It did not warrant a reply”. I reject this argument. The allegations were clear and serious. They required a reply.

Very shortly thereafter, these Defendants applied for summary judgment against the Claimant, the application being issued on the 11 August 1999. The matter was heard before Ian Kennedy J on 28 October 1999, who struck out the action. The Claimant appealed that Order and the appeal was heard by the Court of Appeal who gave their ruling on 24 March 2000.

Before the Court of Appeal, these Defendants sought to maintain the point that the Claimant was estopped from suing, but added the contention that the proceedings represented an Abuse of Process, given the Dehn Judgment. After an extensive review of authority, the Court of Appeal permitted the Claimant to conduct what they described as “re-litigation”, on three grounds: firstly, that the proceedings before the deputy High Court Judge were summary; secondly, that

“ if properly represented the present Claimant could have raised against his co-defendants in the Coutts action the claim which he now seeks to pursue, his failure to do so does seem to be attributable to his own inexperience of legal procedure rather than any deliberate holding back”;

But thirdly, and perhaps most significantly, the appeal was allowed on the basis that the Claimant was now seeking to prove that Roberts was dishonest towards him, an allegation which was not litigated at all before the Deputy High Court Judge.

Although the court eventually permitted the action to continue, like the other constitution of the Court who heard the appeal in the Nathans action, they did so only after delivering some severe strictures on the way the Claimant had behaved to that point:

“Thirdly, although the Defendants are in law answerable for some of the acts of their former partner, the court has a duty to see that litigation is properly conducted so as to enable all defendants and insurers, and particularly those defendants who are only at risk of being held liable vicariously, to discharge their liabilities in an orderly action, and to get on with their lives. Here the defendants settled with Coutts many years ago, and the present claimants three year period as a bankrupt does not seem to us to be anything like a satisfactory reason for the delay in prosecuting this claim.

Finally, we are not satisfied that even now the claimant is being frank with the court. We are not told how this action is being funded, or who is to benefit and to what extent from any award of damages. There is the possibility that this case is simply an improper attempt to use the threat of expensive litigation to extract a settlement from the defendants or their insurers.”

In my view, those strictures of the Court of Appeal, delivered nearly 7 years ago, are highly pertinent when considering the position of the claimant in 2006/2007.

The Court of Appeal went on to permit the action to continue only on condition that the Claimant:

“….having made full and frank disclosure of his financial position, pays into court such amount as may be agreed between the Parties, or in default of agreement such amount as may be fixed by the Master.”

The Claimant did nothing active in compliance with this Order. On 6 July 2000, on the Defendants’ application, Master Trench made an Order that unless the Claimant served an Affidavit of means within 14 days, the action would be struck out. The Claimant served such an Affidavit on the last day. He took no active step otherwise to progress the action.

On 14 November 2000, the Defendants served a Part 18 request for further information as to the Claimant’s means, giving the Claimant 4 weeks to respond. The Claimant did not respond within the time indicated. On 18 January 2001, the Defendant issued an application to strike the case out, given the Claimant’s failure to respond to their request for information. In answer to that, the Claimant did serve a response on 19 January 2001. As in the Nathans Action, it is clear that the Claimant was either failing to comply with the court timetable or only just complying. This was now 10 years after the relevant events.

The Court of Appeal had stipulated that the Claimant could proceed only having given security for costs. He had not yet done so. It was only on 12 July 2001, some 16 months after the Court of Appeal decision, that the Claimant sent a draft notice of application for the Master to fix the level of such security. On 31 October 2001, Master Rose ordered the Claimant to pay £50,000 by way of security, giving him until 28 February 2002 to do so. This Order was made by Master Rose after cross-examining the Claimant as to his means, not on straightforward acceptance of the information he had provided. The Claimant did not provide the security swiftly and move the case on. Rather, the Claimant waited until the very last day to provide the relevant security. The Defendants argue that at that stage the Claimant ought to have applied immediately for allocation and directions. I agree. However the progress of the case was quite soon overtaken by other events.

On 23 April 2002, the Claimant confirmed that the Nathans Defendants were applying for summary judgment and the Shepherds Defendants agreed that the Shepherds Action should be left over until the outcome of the application for summary judgment in the Nathans case. I have set out the chronology of that application and the ensuing appeal, earlier in this judgment. It was on 28 July 2003 that the Court of Appeal gave judgment in the Nathans Action. Clearly it is right that no criticism of the Claimant in relation to the inaction in the Shepherd proceedings should be advanced in relation to the period between 23 April 2002 and 28 July 2003. However, in these proceedings as in the parallel case, this further delay meant that it was in my judgment absolutely imperative to move the case along. Almost exactly 12 years after the events, and six years from the expiry of limitation, the pleadings were unsatisfactory and disclosure had not taken place. Although the express indication from Leading Counsel for the Plaintiff that the claim for loss required reformulation related to the Nathans Action, the point applied with equal force to the Shepherds Action. Given the unusual facts of this case, and the points that had been taken on both sides of the litigation, it would have been impossible to consider reformulating loss in the Nathans Action without also focusing on how the matter of loss was put against the Shepherd Defendants.

On 24 September 2003, solicitors for the Shepherd Defendants wrote to the Claimant expressing directly their concern about the passage of time and asking expressly if the Claimant intended to amend the Particulars of Claim. It is clear that the Defendants’ solicitors were concerned that the fact of the passage of time might prevent a proper trial. They were also making the perfectly sensible suggestion that any amended Particulars of Claim should be served before the Defence is amended, so as to avoid unnecessary costs.

The Claimant’s argument in relation to this letter has been quite fully put. The Claimant suggests that this letter represents a continuation of the moratorium on time which had been extended to the Claimant during the currency of the Nathan’s application for judgment and the appeal therefrom. I cannot accept that. The Claimant goes on to suggest that the proposed amendments to the Defence, including positive averments of fraud, represent a significant change of position and should have been made much earlier. As I have made clear by quotation or summary above, the issue of fraud had been shortly but squarely raised as against the Claimant by these Defendants in the original defence. No doubt it was right to contemplate an expansion and particularisation of those allegations but there can have been no doubt that fraud was being alleged.

It seems clear from the correspondence that Mr Sternberg for the Claimant did not respond to the letter of 24 September. The Defendants solicitors chased him on 6 November 2003, 18 May 2004 and 26 May 2004. This last letter produced the first response from the Claimant, in the letter of 3 June. This letter recites:

“We will discuss with Counsel whether he considers it necessary to amend the Particulars of Claim and shall revert to you in this regard once we have received his comments.”

In my view, this approach by the Claimant was wholly unacceptable. Nine months on from the end of the Court of Appeal hearing in the Nathans Action, and despite many reminders, the Claimant had done nothing and indeed indicated that nothing had been decided.

After some further correspondence, the Defendants wrote on 23 July 2004 pressing the Claimant to let them know whether there was an intention to amend the Particulars of Claim. A further reminder letter was sent on 19 August, producing a response on 26 August 2004, in which the Claimant’s solicitors said they would let the Defendants know as to the question of amendment “as soon as we are able to do so”.

On 29 July 2004, Master Eyre had made an Order for cross-disclosure of documents as between the lawyer’s action, the Nathans Action and the Shepherds Action. The Parties agreed that the Shepherds Action should be transferred for case management by Master Eyre and on 27 September, Master Eyre ordered the Claimant to serve a properly detailed draft reply. The reply was to be drafted by 25 October and a reply was delivered in time. However it was not adequate. As with the Nathans Action, by order of 10 November 2004, Master Eyre ordered that the time for compliance with the direction to file a fuller reply be extended until 15 December 2004, and otherwise the action would be stayed pending further order. It is at this point that the actions converged procedurally.

The claim against the lawyers is that they negligently caused the loss of a chance arising from the Lost Action. The error was, as I have stated above, to issue proceedings when the right to take action had not been assigned from the Trustee in Bankruptcy. The Writ in the Lost Action was issued on 30 January 1997. By their defence in the Lawyers Action dated 15 December 2003, Messrs. Russell Jones and Walker confirm that they were asked to consider a claim against Ronald Nathan and Others in or around July 1996. Russell Jones and Walker had approximately 6 months to consider the matter before the Writ was issued, right at the end of the limitation period. The Second Defendant to the Lawyers Action, Mr McCullough of counsel, was booked for an urgent conference on Wednesday 29 January 1997 to review the draft protective writ that his instructing solicitor had to issue on Thursday 30 January. Part of Mr McCullough’s defence is that he was not alerted to the Claimant’s bankruptcy and that therefore it was not negligent of him to approve or amend the Writ in the Claimant’s own name, without an assignment. Whether that is right or wrong, it is plain that on any view the Second Defendant had only a very short time to consider matters.

The Defendants to the Lawyers Action are properly separately represented, since there is at least to some degree a conflict of fact between them, the resolution of which will depend on memory, since there are no conclusive contemporaneous documents. The point is what Mr McCullough was or was not told at around the time of the conference and before the issue of the Writ.

It follows that resolution of issues of breach of duty by the lawyers will depend upon events at the beginning of 1997, now a decade ago, and estimation of the loss of a chance in the Lost Action will depend upon events 16 years ago in the early part of 1991.

I have outlined above how Russell Jones and Walker remained the Claimant’s solicitors until April or May 1998 and how, despite the change of solicitor to Mr Sternberg, there was no explicit concession that the Lost Action was indeed lost, before the action was struck out by Stanley Burnton J on 22 November 2002. It is agreed that the limitation period for the Lawyers Action expired not later than 31 January 2003. Working back from there, the pre-action protocol, if operated, would have meant that a Letter of Claim should have been sent no later than 3 months before the last moment for the issue of proceedings: in other words by 31 October 2002.

The Defendants in the Lawyers Action complain that no such Letter of Claim was sent by that date. The Claimant responds that on 9 October 2002, in the period of preparation before the hearing in front of Stanley Burnton J, the Claimant’s solicitors wrote to Russell Jones Walker making it clear that they wanted from them, on the advice of leading counsel, to know any arguments which Russell Jones and Walker felt should be made to the Judge in order to sustain the Lost Action. This was in order to avoid any suggestion that they had failed to exhaust their remedies, before turning to the lawyers or their insurers for recompense. This letter recounts the fact that Russell Jones and Walker had conceded errors in relation to the Lost Action in correspondence many years before. Such concessions do not mean that the solicitors were bound by them as to liability, but in my judgment they do serve to support the Claimant’s position that Russell Jones and Walker were fully alive to what was happening procedurally in the autumn of 2002. Whether or not a Letter of Claim was demanded by the protocol in this period, I do not accept that the absence of such a letter:

“…..deprived the Defendant of the opportunity to consider the nature of [the Claimants] allegations”,

Nor do I agree, that the absence of such a letter of claim deprived the solicitor defendants of any other opportunity in reality. The position may be a little different for the Second Defendant Mr McCullough. As I understand the chronology, he was not involved in any of the build-up to the hearing before Mr Justice Stanley Burnton. I can find no correspondence in the file before me relating to him which ante-dates the service of the claim form in this action. The claim form was issued on 23 January 2003 but was not served until 21 May 2003.

It follows that I am not critical of the Claimant as to the speed with which the Lawyers Action was conducted before the end of November 2002. By that point, the solicitor defendants knew of what was likely to happen and were in a position to consider their own approach to the litigation. The Second Defendant to the Lawyer Action was not. So far as Mr McCullough was concerned, no doubt it would have been useful to him to have early notice of what might well be coming. However, in realistic terms, things were bound to go much as they did in terms of the timetable against both defendants to the Lawyers Action until early 2003. It certainly is right to note that the claim form was issued right at the last minute – yet again – and also that the Particulars of Claim in the legal action were served right at the last minute on 21 May 2003. As I have observed above, given that the alleged breach was dependent on events more than 6 years before and estimation of the loss of chance based on events more than 12 years before, the Claimant had an obligation to proceed swiftly.

There had been no disclosure of documents by June 2003. On 4 June, Russell Jones and Walker asked the Claimant to assist the Defendants by providing material documents in advance of finalising the defence. Despite five reminder letters, the Claimant did not respond substantively to this request nor did he provide the disclosure sought before the formal deadline in September 2004. This was a clear breach of duty. The Claimant’s response to this is to say that it is not established the Defendants were missing any documents relevant to the case and that it has not been shown the preparation of the defence was impaired.

Undoubtedly preparation of the defence was delayed. The Defendants say that given the complexity of the case, it is inevitable the defences would not have been served within a month. They submit it is likely defences would have been served by the end of August 2003 and this seems to me realistic. The Defendants suggest that this delay was due to three causes: the Claimant’s failure to use the pre-action protocol; the Claimant’s failure to provide advance disclosure or answer to Part 18 requests and the Claimant’s objection to cross-disclosure between the two Defendants to this action. I have commented above on the pre-action disclosure point which, in substance, I reject. However, there is substance in the other two points.

The Defendants say that there are clear lacunae in the documents which they held. Firstly, there is no documentation concerning the Claimant’s finances at the time of his bankruptcy in 1993. This is important since the claim he mounts includes a claim for losses consequent upon his bankruptcy. Such a claim depends establishing the proposition that, but for the breach of duty at the heart of the Lost Action, the Claimant would not have become bankrupt. As I have observed earlier in this judgment, the Claimant had significant other debts at the time of his bankruptcy and thus his claim for losses consequential upon the bankruptcy would depend upon him showing that his finances were strong enough to withstand his other debts and thus to preclude bankruptcy based on them.

The second tranche of missing documents related to the criminal trial. There is a transcript of the summing up in existence, but no transcript of the evidence given. As I have said above, some notebooks exist of the evidence of some witnesses and as I understand it, those are available. However, no full record of the evidence of the trial is available to the Defendants in the Lawyers Action. The Claimant has not disclosed any such full record.

Thirdly, the Defendants to the Lawyers Action have no documentation or knowledge of the investigations by the Office for the Supervision of Solicitors into Nathan and Co, which were available. Moreover there has been no disclosure of documentation relating to the Claimant’s finances in late 1996 and 1997, for the purpose of establishing that he could have funded the Lost Action and documentation as to how the Tring Option came into existence.

The question of documentation is dealt with fully in the witness statement of Graham Reid, an employed barrister with the solicitors for Russell Jones and Walker. He sets out the position in Section G of that witness statement, where he makes it clear that many of the documents which Russell Jones and Walker passed over to the Claimant appear to have been mislaid. These include trial records, three OSS files, a complete collection of trial exhibits and the unused Prosecution material. In the course of argument, it was suggested that the notebooks recording the trial were held. However it further appeared this assertion by the Claimant was doubtful and the record was as I have stated above only of part of the trial. In truth, the situation appears to be that even now in 2007 the Claimant has not reliably clarified what he holds by way of documentation, even in relation to that which was passed to him by Russell Jones and Walker in 1998.

On 24 July 2003, as part of the process of preparation for service of defences, Russell Jones and Walker served Part 18 requests for information. The Defendants say the Claimant’s acknowledged failure to respond to these requests was part of the reason for the delay in preparing defences. The Claimant’s response is to say there is no breach of the Civil Procedure Rules, because an order for response to these requests was never sought or obtained, and the reasonableness or otherwise of the requests has never been contested. The requests are contained in a two page letter, which is before me. In my judgment they are shortly expressed, go to the heart of the Lost Action (and thus the losses in the Lawyers Action) and are entirely reasonable. They demanded a response. For example, they include requests to particularise the assets relied upon by the Claimant at paragraph 16(iii) of the Statement of Claim in the Lost Action, and a request to particularise the damages in the Lost Action, which had not adequately been done. The Defendants wished to be told of all court proceedings in connection with Crow Knowl to which the Claimant had been or continued to be a party. Given the history of this site and of the Claimant’s dealings with it, in my judgment, that was an obviously reasonable request. I do not yet know the answer to it.

Before the defences were served in this action, co-ordinated case management of all three cases began to be discussed for the first time. This arose in September 2003. The Claimant’s solicitors suggested that the Nathans Action and the Shepherds Action should be heard together, but separately from the Lawyers Action. This discussion was bound to take some weeks, or perhaps a month or two, to resolve, failing which it should have been resolved by seeking directions from the Court. The Claimant had to manage this, since he was the only common party to all the actions concerned. The matter having been raised as a topic in September 2003, Russell Jones and Walker asked the Claimant to state his views on 16 December 2003, with chasing letters on 16 and 19 January 2004.

In the meantime, defences were served in the Lawyers Action, on behalf of Russell Jones and Walker on 16 December 2003 and in respect of Mr McCullough’s defence on 12 January 2004. These were served in the absence of some of the documents as I have summarised above, and in the absence of answers to the Part 18 request. The Defendants did ask for and receive some extra time to serve these defences, approximately between September 2003 and the end of the year. To this extent, the Defendants extended the timetable. However, in my view this has to be seen in context, and not only of the unanswered requests for information, the documentation which was apparently missing and the desire to streamline the defences as between the two Defendants to the Lawyers Action.

What was also taking place over the same period was a dispute over whether the Claimant could prevent Russell Jones and Walker from copying the documents which they did hold to Mr McCullough. The Claimant objected to them doing so. I am told, and accept, that this objection was taken on the advice of Counsel. It still seems to me incredible. I agree with the Defendants that it was utterly misconceived. The Claimant maintained his objection to the barrister defendant seeing the documents held by the solicitor defendant until 4 November 2003 as to the generality, and maintained a specific objection to part of the material until 11 November 2003. I am told and accept that this was important in delaying the preparation of Mr McCullough’s defence. Given that the lawyer defendants wished to co-ordinate their defences – a perfectly legitimate thing to attempt – this would naturally have the effect that the defences would not be available until the year’s end.

How the case progressed in 2004 depended crucially on the Claimant, since the question of co-ordinating the three actions was, rightly, under consideration. In early 2004, both Defendants to the Lawyers Action served their Allocation Questionnaires. Russell Jones and Walker’s questionnaire was served on 16 January and Mr McCullough’s questionnaire on 10 February. The Time for completion of these questionnaires was 16 January 2004. Had the Claimant responded in kind quickly and brought the matter before a Master the case management and co-ordination of the three cases could have been rapidly addressed. As it was, despite pressing by the Defendants, the Claimant did not serve an Allocation Questionnaire until end of April.

The Claimant was sent letters for proposals on case management on 4^th, 7th and 26 May, 14 June and 13 September 2004. On 27 July 2004 the Claimant was warned by Russell Jones and Walker about:

“The excessively slow pace of this action, together with the apparent lack of progress in the other two actions and your continuing failure to respond to correspondence …..”

On 29 July 2004, Master Eyre ordered disclosure by 10 September 2004 and a further CMC on 27 September 2004. On 16 September 2004, the Claimant wrote to the lawyer defendants in a way which indicated he had not yet reached a final decision that it was advisable for all these cases to be managed together.

On the day of the hearing, the Claimant served an unsigned disclosure list.

The defences in the Lawyers Action had been served in December 2003 and January 2004. There had been no reply from the Claimant. The Defendants say that their defences called for replies. I agree. Indeed, looking at the Claimant’s pleading it is clear that his position was inadequately set out. Had he done so, this action could have been progressed much more rapidly during 2004.

However, perhaps more to the point is the fact that Master Eyre agreed the Claimant’s position was inadequately pleaded. At the CMC on 27 September the Claimant was ordered to file “properly detailed” draft replies to the defences in all three actions by 25 October 2004. It is at this point that management of all three cases converges.

On 18 October 2004, Master Eyre ordered the Claimant to pay outstanding Costs Orders in the Nathans Action and to pay £75,000 into court as security for the Defendants’ costs up to inspection plus the costs of the application. The Claimant did comply with this Order, making payments on 20 October and 4 November. These Orders were “unless” orders and had the Claimant not complied, the Nathans Action would have been struck out.

On 5 November 2004 there was a Draft Order from Master Eyre staying the Lawyers Action on the ground that, in the light of the inadequacies of the draft replies from the Claimant, there was reason to conclude the action was an abuse of process. In effect, this gave the Claimant five days notice that the replies were regarded as deficient before the hearing due on 10 November. Similar orders were issued on 8 November in the Nathans Action and 7 November in the Shepherds Action. However the matter was before the Master in all three actions on 10 November. On that day, and in respect of all three actions, the Master ordered that the Claimant’s time for compliance with the direction to file replies be extended until 15 December 2004 and otherwise the actions should remain stayed pending further order. The basis of this decision was clear. The Claimant had even now failed adequately to particularise his case.

On 15 December - again the very last day - the Claimant filed further draft replies in each Action. These were not very different from the previous drafts. The Claimant did not apply to lift the stay in early 2005. On 21 April 2005, the Claimant’s request for permission to appeal the Costs Order of Master Eyre of 10 November 2004 was refused. The Claimant has not progressed any of these cases from that point. The Claimant took no step to lift the stay imposed by Master Eyre in late 2004. The next event in these cases is that in August and September 2006, the Defendants applied to strike out each case, in the applications which are now before me. It was at that point on11 October 2006, that Mr Justice Eady gave his directions for this hearing and lifted the stay on the proceedings for the purpose of hearing the application to strike out. Even in the case of these applications, the Claimant served his statements for the application hearing only on 15 December 2006, 29 days after the time limit set by Mr Justice Eady.

That brings the matter procedurally up to date.

It will be seen from the summary above that I am critical of the Claimant’s delay in all three of these cases. In the Nathans Action there has been unwarranted delay from September 1998; in the Shepherds Action from June 1999 and in the Lawyers Action from about February 2003. I have dealt with the details of criticism in the course of my analysis and I will not repeat them here. However, I emphasise four points. Firstly, I have made every reasonable allowance for the unusual circumstances of this case in excluding the Claimant from criticism before the dates indicated. Secondly, in all of these cases, the passage of time for those dates meant there was a heavy obligation to progress the cases from that point onward. Thirdly, the Claimant has in my judgment demonstrated a consistent pattern through all three cases. His failures and delays are repeated over and over again. In my view, he has been toying with his opponents and consciously manipulating the system. Fourthly, if the period up to November 2004 did not demonstrate that attitude clearly, then the period thereafter has done so. The failure to seek to lift the stay and the failure to progress any of these actions between the end of 2004 and the second half of 2006 seems to me to copper-fasten the conclusion that this Claimant was not taking his obligations seriously. That is underpinned by the fact, as we discovered in the course of the hearing, that he has progressed other litigation of more recent origin during that same period.

In the course of analysing the history, I have considered all of the detailed representations made by the Claimant about specific periods of delay or points of inactivity. I will not repeat those here. In my judgment they do not exculpate the Claimant. In some cases these submissions are rendered more unattractive by implications of bias against one or more Master.

The Claimant also lays part of the blame for delay in recent years on the death in 2004 of his ‘right hand man’ Mr Stan Shaw, who had helped him with these cases. While naturally one has sympathy with the loss of an important colleague, this cannot be the reason for the very considerable delays which took place before Mr Shaw’s death, and cannot be an excuse for more than a small proportion of any delay since his demise.

The Claimant’s most important plea in defence of his inactivity is his lack of funds. I was told many times during the hearing by Mr Pymont QC that the Claimant did not have the money to progress this litigation easily. His resources as an individual businessman, it was said, were very obviously less than those of his opponents who were in reality insurance companies. The resources of his solicitor were also advanced as an excuse. Mr Sternberg has in practical terms been coping with this litigation on his own. He cannot begin to match the financial or manpower resources of the large firms who represent the Defendants.

To some degree, I accept these points. Indeed, to some degree, they are self evidently correct. However, there are two difficulties in accepting this line of argument as anything like a complete answer. Firstly, there has been no frank or detailed disclosure by the Claimant of his means. He has not even begun to set out the kind of detail which would be needed, if he were to have a prospect of showing that he has been straining his financial sinews even moderately in relation to these cases. We were told that he has paid his debts, that his business has been better in the last year or two. He made a profit of £265,000 in 2005. It is said his prospects are good. These assertions are very general.

We were also told that since the Defendants issued these applications, the Claimant has paid his lawyers for their past work, enabling him to set out to defend these applications as he has. Of course, the natural inference from that is that he had not paid them for some considerable time until put to it by these applications, but was able to do so rapidly when it seemed necessary in his interest to do so.

The second problem with this explanation is, as I have already observed, that the pattern of breach of time limits, inactivity and delay appears much more tactical than the result of lack of funds. That pattern, set against the extreme length of the life of these cases, combined with the lack of any convincing detail as to his financial difficulties, together lead me to the conclusion that impecuniosity has not been the true reason for his delays. In my view, he has been seeking to keep these cases alive in case something comes of them, rather than seeking genuinely to pursue them to a conclusion.

The question of loss in these cases is particularly vexed and complex. It will be recalled that, in the Nathans Action, it was accepted by leading counsel years ago that the claims should be re-pleaded, amending the claim as to loss. The amendment has never happened. In the course of the hearing before me, Mr Pymont QC advanced a fresh analysis on the loss in both Nathans and Shepherds Actions, which has not been pleaded and was not set down in any written form before the hearing.

The Claimant’s position, at its heart, is that he entered into the first Coutts loan, and then purchased land of very low value, by reason of Mr Nathan’s negligent failure to discover that the absence of planning permission would prevent the land from being developed. Whilst it is clear that the Claimant did not part with anything like the full sum of £1.6m advanced by Coutts when acquiring Crow Knowl, he did part with sizable sums of money. No doubt for this reason, the Defendants to the Lawyers Action do not submit that there is no arguable loss in relation to the Lawyers Action.

The Nathans Action and Shepherds Action relate to the second advance by Coutts in the sum of £1.5m. Here the nub of the claim is that the money was loaned to the Claimant by Coutts, on the basis of fraud and/or negligence by Mr Nathan and fraud by Mr Roberts. On any view, the Claimant did not part with much of this advance. He has also himself been adjudged fraudulent in the obtaining of the money from the bank. It is therefore argued by the innocent Shepherds and Nathans Partners that the Claimant should be denied a remedy in relation to this advance by reference to his own fraud.

The situation is further complicated by the fact of the significant – and arguably complete – recovery of their losses by Coutts. I have outlined the figures for such recovery earlier in this judgment. Setting aside for a moment the question of whether these debts precipitated the Claimant’s bankruptcy, thereby causing him further consequential loss, it is argued by the Shepherds and Nathans Defendants that the discharge of the liability to Coutts means that the Claimant cannot seek damages in respect of these loans, because he would profit by such an award rather than achieve compensation for loss. Having emerged from bankruptcy and having agreed the division of the proceeds of these actions with the Trustee in Bankruptcy, any such award would become a real profit in his hands.

The Claimant argues that such recovery would be legitimate. The Claimant’s analysis rests heavily on the fact that the various professional indemnity insurers who paid out to Coutts did not obtain a full discharge of any liability to the Claimant. His indebtedness to Coutts was proved in his bankruptcy, Coutts remained listed as creditors in his bankruptcy throughout and thus, says Mr Pymont, following the arrangement with the Trustee, the Claimant can perfectly properly pursue his claim. Mr Pymont argues that no restitution will follow in these circumstances, since, in paying off Coutts, the various insurers were not satisfying the Claimant’s debt to Coutts, but were compromising claims made against others.

Mr Pymont relies upon the case of Crantrave Ltd –v- Lloyds Bank Plc [2000] 4 AER 473, where the Court of Appeal held that, in the absence of authorisation or ratification by the customer of a bank’s payment to a third party, the mere fact that the bank’s payment enured to the benefit of the customer did not establish an equity in favour of the bank against the customer. In order to establish such an equity, the bank would have to show that the payment discharged (at least partially) a legal liability of the customer. On the facts of that case, it had not been established that the Claimant company’s legal liability to its creditor had been discharged by the voluntary payment on the part of the bank and nor had it been established that there was authorisation or ratification.

Mr Livesey QC for the Shepherd Defendants, supported by Mr Pooles QC for the Nathan Defendants, argues against this application of Crantrave to the facts in this case. A number of arguments are deployed but the nub of their position is that the law cannot countenance a double recovery. In so far as the Claimant recovered these monies and was allowed to keep any of them, these Defendants would have paid twice over for the same liability. Mr Wardell QC, although appearing for the barrister defendant to the Lawyers Action, has addressed this point in written submissions, submitting that any proceeds of such an action in the hands of the Claimant would be held on trust (on these facts) for the insurers or could be recovered by them by bringing a restitution reclaim. In support of such a claim he cites Alliance and Leicester –v- Howkins & Harrison [2001] PNLR 27.

I find these arguments attractive. It also appears to me that this analysis would gain support from part of the judgment of Lord Justice May in Crantrave at page 480b, where he said:

“In another case, it might be possible to establish that the customer ratified the gratuitous payment either expressly or by taking advantage of it; or there might conceivably be circumstances not amounting to ratification in which it would nevertheless be unconscionable to allow the customer to recover from the bank the balance of his account without deduction of a payment which the bank had made gratuitously. But I agree with Pill LJ that no such circumstances were established in this case.”

I am therefore highly sceptical of the prospects of the Claimant establishing loss along the lines advanced by Mr Pymont. It appears to me very likely that the courts would regard the attempt to sue in circumstances of “double recovery” as being clearly distinguishable from the much more passive position taken by the Claimants in Crantrave. If this Claimant’s position does not represent an attempt to “take advantage” of the insurers payments to Coutts, and is not to be regarded as unconscionable, it is difficult to see what would. The line advanced by the Claimant is deeply unattractive.

However, having considered the point, it appears to me that it is not wise on an interlocutory basis to conclude that the Claimant has absolutely no prospect of recovering loss along these lines. The facts are too uncertain and too complex and the operation of equitable remedies too dependent on the detail of what remains to be established. It appears to me that the Claimant’s position is very weak, but I cannot say there is no arguable loss arising from such a claim.

The other basis of claim advanced by the Claimant is loss consequential to his bankruptcy, which in turn he says was consequential on the indebtedness to Coutts. It is certainly the case that, as a matter of history, the Claimant’s bankruptcy followed swiftly on the judgment of Conrad Dehn QC. Yet as I have already observed, the Claimant had very significant debts apart from these. Here it must be for the Claimant to establish that his bankruptcy was in truth a consequence of this debt. In order to do so, he would have to demonstrate that he would not in any event have been made bankrupt at about the same time. That in turn depends on his showing the detail of his finances, and financial prospects, in or around 1993. I have dealt with this above. The Claimant has failed to set out his stall on this, failed in disclosure and, by his prolongation of the proceedings, rendered any trial of such an issue virtually impossible.

In summary, therefore, my conclusion is that the Claimant has an arguable case that he could demonstrate loss, but only just. His position is very weak. That must be the context in which to consider the applications to strike out the claims.

There are particular circumstances affecting the individual defendants, which it is suggested should be considered relevant to prejudice. In the Nathans Action Mr Rubin, Mr Simmons and Ms Levy have already been bankrupted, at least in part in relation to their vicarious liability to Coutts. Mr Price and Mr Berwin were “salaried partners” in Ronald Nathan and Co. It was only upon the service of a draft reply that it was intimated claims would be pursued against them on the basis of their being held out as partners. The court was also told that the claim exceeds any claim of cover available to these defendants. In relation to the Shepherds Defendants, the witness statement of Robert Ridgwell, the solicitor with conduct of their defence has told the court that:

“The extended continuation of proceedings in this case has caused real difficulty to these defendants. Two out of the three current partners in Shepherds are ill and all are in their fifties and above. They are under-insured and unable to wind up their affairs because of the existence of this claim.”

Yet another debate emerged between the two sides in the course of this hearing. The point here is whether the Claimant has the obligation to seek relief from the stays on these actions or, the stay on each action having been lifted by Mr Justice Eady for the purpose of these summonses, the Defendants have the burden of making out an application to strike out each Statement of Case pursuant to CPR 3.4. Mr Pymont argued for the Claimant that when Mr Justice Eady lifted the stay on each action, this was a straightforward order and the Claimant bears no further burden.

In my judgment, this debate is rather arid. The proper approach is to consider whether the Statement of Case should be struck out, in the full knowledge that the stay in each action was only lifted at the behest of the Defendants for the purpose of these summonses and bearing in mind the considerations set out in CPR 3.9 for the relief from sanctions. There is a close convergence between CPR 3.9 and CPR 3.4 which in its relevant part reads:

“(2)

The court may strike out a Statement of Case if it appears to the court –

…..

(b)

that the Statement of Case is an abuse of the court’s process or is otherwise likely to obstruct the just disposable of the proceedings; or

(c)

that there has been a failure to comply with a rule, practice direction or court order.”

Various authorities help as to the proper exercise of discretion under the CPR. In Biguzzi –v- Rank Leisure Plc [1999] 1926 the Court of Appeal emphasised that, under the Civil Procedure Rules, the keeping of time limits was very important and the court had an unqualified discretion under Rule 3.4(2)(c) to strike out a case where a litigant failed to comply with the rules or an order of the court. The court emphasised that delay was not to be tolerated and there was to be no return to the “previous culture of regarding time limits as being unimportant.” The court also emphasised that there may be other remedies than strike-out.

In Annodeus Ltd & Anr –v- Gibson & Anr (unreported) 2 February 2000, Mr Justice Neuberger considered the Biguzzi case and set out an account of the principles applicable under the Civil Procedure Rules when the court entertains an application to dismiss a claim for want of prosecution. Those principles are set out at pages 5 – 7 of the judgment. I will not repeat them here. Taken together, they do lay greater emphasis than previously on sanctions to prevent delay. Mr Justice Neuberger also emphasised that:

“a claimant has and always has had a duty to get on with proceedings, and is liable to sanctions if he does not”.

The learned judge stated that sanctions should be proportionate and that:

“to dismiss a claim where the claimant appears to stand a reasonable chance of success and of recovering substantial damages is a strong thing to do”.

The Judge went on to suggest a check list of normally relevant factors in such a decision, which I have found useful in coming to my conclusions in these cases.

The Biguzzi case was considered by the Court of Appeal in Taylor –v- Anderson (unreported, 7 November 2002). In that case Lord Justice Chadwick reminded us that pursuant to CPR 3.4 it was appropriate to consider whether there was a substantial risk that a fair trial was impossible by reason of the delay in the case, rather than just a possibility.

In Asiansky Television Plc & Anr –v- Bayer-Rosin(a firm) (Unreported) 19 November 2001, another constitution of the Court of Appeal reviewed CPR 3.4, Biguzzi, Rank Leisure Plc and other authorities. One passage which the Court of Appeal cited with approval came from UCB Corporate Services Ltd –v-Halifax SW Ltd (Unreported) 6 December 1999 CA, where Lord Lloyd said:

“It would indeed be ironic if as a result of the new rules coming into force, and the judgment of this court in the Biguzzi case, judges were required to treat cases of delay with greater leniency than they would have done under the old procedure. I feel sure that cannot have been the intention of the Master of the Rolls in giving judgment in the Biguzzi case. What he was concerned to point out was that there are now additional powers which the court may and should use in the less serious cases. But in the more serious cases, striking out remains the appropriate remedy where that it is what justice requires.”

In reaching my conclusions I recognise that these three cases are separate pieces of litigation and that, in theory, different conclusions could be reached in respect of them. However, I have concluded on the facts of this case it would be unnecessary and indeed inappropriate to do so. They are tied closely together by their content and the approach of the Claimant to conduct of the cases, has not differed from the one to the other. Whilst the Lawyers Action was necessarily commenced later than the others, its resolution would only be possible by reference to exactly the same events and evidence underlying the other two claims. If I were to reach conclusions in respect of each of these cases in turn, they would be merely repetitive.

The delay in each of these cases has been very long indeed. I have identified it above in respect of each case. Even the Lawyers Action relates to events nearly a decade ago. In my judgment, the delay was already grossly excessive in November 2004 when Master Eyre put a stay on all three actions. It appears to me that the Claimant might very well have been vulnerable to applications such as these at that point.

I have already indicated my view as to the excuses put forward by this Claimant for his delay. I do not accept that there is any valid excuse, in relation to the periods I have already identified. Although it is correct that proper regard must be had to differing means between parties, the Claimant has not brought home the assertion that he was in truth precluded from advancing these cases by a lack of means. Even had he done so, the delay in these cases has been so long, and the failures to comply so repeated, that in my judgment we would likely be at a point where a lack of means could not justify further prolonging the litigation.

I have commented above on the prejudice caused to the Defendants by the delay. Personal prejudice is of some importance, but of more importance is the degree to which already highly complicated and difficult litigation has been made well nigh impossible to try fairly. I have been addressed as to oral evidence by all the Defendants. A sensible review of the witnesses who would normally be expected to give oral evidence in this case would take the attendance list to 20 people and perhaps more than 30. In most instances they would be relying on their memory of events in 1991. The Claimant argued that this matter could properly be dealt with by reading the documents and having the Claimant cross-examined. I completely reject that approach. As I have indicated above, I do not believe the documents can be relied upon to tell the full story or necessarily an accurate story. The consequence is there is a strong likelihood that a fair trial of each action is now impossible.

The impossibility of a fair trial is reinforced when one considers what would be the realistic prospective timetable for the litigation. Since pleadings are not closed, disclosure has not happened and the matter is so complex, it would realistically be likely to be 2009 before a trial could be commenced.

I have considered the extent to which these Defendants have been responsible for delay up to now. They have contributed to some degree, a contribution which has been detailed in the various chronologies prepared for this case. I have already analysed that above. However, in my judgment their contribution has been minor, compared with that of the Claimant. If the Claimant had behaved properly and managed these cases adequately, they would have been tried by now. In my view, there is absolutely no doubt that the real responsibility for delay lies with the Claimant. There have been repeated serious failures to comply with directions and orders, to the extent that the conduct of these cases has amounted to an abuse of the court’s process.

For all those reasons, the only just outcome is that each Statement of Case will be struck out pursuant to Civil Procedure Rules 3.4.