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Mellor & Ors v Partridge & Anor

[2012] EWHC 1415 (QB)

Neutral Citation Number: [2012] EWHC 1415 (QB)
Case No: HQ0X05544/HQ12X0369
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 05/07/2012

Before :

THE HONOURABLE MR JUSTICE BEATSON

Between :

(1) The Rt. Hon. David Mellor QC

(2) Christopher Jemmett

(3) Mark Law

Claimants

- and -

(1) John Arthur Partridge

(2) Frank David Peregrine Partridge

Defendants

Romie Tager QC (instructed by Jeffrey Green Russell) for the Claimants

John Brisby QC and Paul Greenwood (instructed by Streathers Solicitors LLP) for the Defendants

Hearing dates: 15 - 17 May 2012

Further submissions: 31 May; 8, 14 and 21 June 2012

Judgment

Mr Justice Beatson :

[Sections I – V contain what was (save for minor corrections) circulated to the parties in draft on 24 May 2012. Section VI deals with the “English v Emery Reinhold” submissions made since then.]

I. Introduction

1.

These proceedings concern the sale in 2005 of Partridge Fine Arts plc (“PFA”). PFA was an old established and very well-known New Bond Street dealer in antiques and fine art. The first defendant, John Partridge, was its Chairman between 1958 and 19 January 2006. The second defendant, Frank Partridge, John’s son, had been its Sales Director until 29 February 2004 when he left PFA. The main applications before me are by John and Frank Partridge to strike out two sets of proceedings brought on 14 December 2009 (“the original claim”) and 31 January 2012 (“the second claim”) against them by the claimants. The claimants, the Rt. Hon. David Mellor QC, Christopher Jemmett, and Mark Law, allege that John Partridge made fraudulent misrepresentations during the sale in 2005 of PFA to Amor Holdings Ltd (“Amor”), the claimants’ corporate vehicle. They also bring claims against John and Frank Partridge as assignees of Amor and PFA. There is also an application by the claimants dated 16 December 2011 for permission to re-amend the Particulars of Claim in the original claim.

2.

As presently constituted, the original claim alleges fraudulent misrepresentation by John Partridge. The claimants allege that the misrepresentations related to systematic fraudulent trading practices involving the counterfeiting of items or sourcing such items over a period of at least twenty years before the acquisition of PFA by Amor and the claimants: Re-Amended Particulars of Claim (“RAPOC”), paragraphs 4, 5 and 25. There were originally eight other defendants, including Frank Partridge. On 30 July 2010 Mackay J granted their application to strike out the claims against them. An application for permission to appeal against this decision was renewed to an oral hearing after being refused on the papers but was abandoned on 4 February 2011, two weeks before the oral hearing. No further steps were taken in the proceedings until ten months later when, on 16 December, the claimants applied to amend their pleadings.

3.

The proposed amendments seek to introduce a new fraudulent misrepresentation claim (“the pension representation”) against John Partridge. During the course of the hearing Mr Tager QC abandoned this claim. For reasons I shall give it should not have been made in the first place in the way that it was. The claimants also seek to introduce claims by them as assignees of all causes of action that Amor and PFA, which have both gone into liquidation, have against John and Frank Partridge. The assignments by the two liquidators are both dated 1 September 2011. The rights claimed by the claimants as Amor’s assignees are in respect of the alleged fraudulent misrepresentations; those claimed as PFA’s assignees are in respect of alleged breaches of fiduciary duty and/or breach of contract.

4.

I have referred to the 2010 strike-out by Mackay J. The claim against Frank Partridge and the seven other defendants was that during the negotiations for the sale of PFA’s shares John had acted as agent for all PFA’s other shareholders and had therefore made the fraudulent misrepresentations on behalf of the other shareholders. Mackay J described those claims as “inherently implausible” and “entirely fanciful”. He held they did not have a realistic prospect of success because it could not be said that John Partridge had the authority of the other shareholders to make the pleaded representations.

5.

Save for the introduction, the Particulars of Claim in the second claim are identical to the proposed re-amended Particulars of Claim of the original claim. The reason for issuing new proceedings was that the claimants anticipated that the defendants would resist an application to amend the original claim on the grounds that the new claims and, in particular the assigned PFA claims, were outside the relevant limitation period.

6.

On 28 February 2012 John and Frank Partridge applied for summary judgment of the second claim under CPR 24.2 as disclosing no real prospect of success and/or for an order striking out the claim under CPR 3.4 on the ground that it disclosed no reasonable grounds, or under the inherent jurisdiction. John Partridge also applied for an order striking out the original claim on these grounds.

7.

The claimants’ application to amend the Particulars of Claim of the original claim is also formally before me, but Mr Tager QC, in paragraph 46 of his written submission on behalf of the claimants, stated that they are content for the court to treat all the claims against Frank Partridge and the PFA and Amor assigned claims against John Partridge as brought under the second claim in order to avoid arguments relating to limitation and the doctrine of relation back which he characterised as unnecessary and technical. The application to amend is therefore only relevant to amendments to the claims against John Partridge in the original claim (including the now abandoned “pension representation” claim).

8.

The evidence on behalf of the claimants consists of two statements (dated 16 December 2011 and 27 April 2012) of Mr Law, the third claimant; a statement (dated 27 April 2012) of the first claimant, the Rt. Hon. David Mellor QC; a statement of Monica Antonelli (dated 26 April 2012), a customer who issued proceedings against PFA in the 1990s; a statement of George Henderson (dated 27 April 2012), a director of PFA between 1988 and 2001, and a statement of Gareth Jones (dated 27 April 2012) of Jeffrey Green Russell, the claimants’ solicitors. There are also statements prepared and dated in the spring of 2010, but only recently served. They are those of David Francis, a specialist in the restoration of antique textiles and carpets, Johnny van Haeften, Yannick Chastang, the Managing Director of a restoration and conservation business, and Alexander de Carcaci, a fine arts consultant who acted for Mr Wexner, one of PFA’s customers.

9.

The evidence on behalf of the defendants consists of two statements of Frank Partridge (respectively dated 9 March and 9 May 2012), a statement of John Partridge (dated 10 May 2012), two statements of Anthony Smith (dated 9 March and 10 May 2012), PFA’s Finance Director from the mid-1980s until the sale to Amor, two statements of Milton Silverman (dated 9 March and 10 May 2012), of Streathers Solicitors LLP, the defendants’ solicitors, and a statement of Justin Freeland (dated 9 May 2012), of Freeland Restoration and previously employed by PFA.

II. The background

10.

PFA was established in 1900 by John Partridge’s grandfather. It became a listed company in 1989, with a majority of shares held by members of the Partridge family and their family trust. During the 1990s, it was doing well and making pre-tax profits of the order of £2 million a year. However, its business then declined and by the end of 2004 it was in a poor state. Its turnover was £7.6 million (compared with over £10 million in 2003) and there was a loss of £1.8 million (compared to a profit of £0.4 million in 2003). I have referred to the fact that, by then, Frank Partridge had left PFA. The reasons for his leaving are a matter of dispute between the parties. The claimants’ case is that Frank Partridge was forced to resign from the board as a result of the handling of a claim by a customer, Mr Eric Greenberg, concerning the authenticity of the date cited on the description of sale of three items of French furniture in early 2003. The defendants’ case is that he left because internal disagreements led to a break-down of relations between him and other members of PFA’s Board, and because he wished to develop his own business interests. Frank Partridge’s evidence is that the Greenberg dispute provided “the context” for his departure. At any rate, a compromise agreement between him and PFA records that the effective date of termination of his employment with PFA was 29 February 2004, and sets out the terms.

11.

By early 2005, John Partridge, then aged 76, was seeking a buyer for the business. An announcement was made in February 2005. Mr Law, who had dealt in antiques for many years, learned of John Partridge’s interest in selling PFA. He and a prospective backer made inquiries about PFA. They formed the view that it was “pretty insolvent”, and “cashflow insolvent”, and Mr Law was informed that “there were a number of predators circling the Partridge carcass”: Mr Law’s 19 April 2010 statement, paragraphs 4 – 6 and 11. Mr Law expressed his interest in acquiring PFA, first to a member of the board and then to John Partridge. Negotiations started in about the spring of 2005. Mr Law played the principal role in these negotiations. His original backer, a Mr Stenger, pulled out in about June, and he then formed a consortium with Messrs Jemmett and Mellor. They incorporated Amor on 28 September 2005. During the course of the negotiations, PFA’s financial advisers were Dresner Kleinwort Wasserstein, and its solicitors were Farrer and Co. The claimants were represented by Corporate Synergy Plc, and Denton Wilde Sapte. It was during these negotiations that the claimants maintain John Partridge made a number of representations.

12.

A number of the key meetings and the opposition of Frank Partridge and his brother Claude to the Amor bid, and Frank’s attempt to mount an alternative bid, are summarised in Mackay J’s decision (see [11] – [15]), but eventually the negotiations succeeded. On 18 November 2005, the Boards of Amor and PFA announced they had agreed on the terms of a recommended partial offer by Amor (“the RPO”) for approximately 51% of PFA’s issued share capital. The offer incorporated a deferred offer for the subsequent acquisition of the remaining 49% of PFA’s issued share capital. This was set out in a document known as “the instrument” dated 17 November 2005, executed by Amor. Amor’s obligations under the deferred offer were guaranteed by the claimants to the extent of £4 million. The personal liability of Messrs Mellor and Jemmett was limited to £1.25 million. Mr Law’s personal liability was limited to £1.5 million.

13.

Under the terms of the RPO, Amor was to pay an initial consideration equal to 35.4 pence per share, and an additional uncertain amount per share. The latter was to be calculated in the light of the outcome of a planned auction of certain items of PFA’s stock. The price per share under the deferred offer was to be equal to the RPO price, plus 4 pence per share subject to a maximum of 74 pence per share. It was Amor’s obligation under the instrument to make the deferred offer within a four year period.

14.

The post-acquisition auction of the items of PFA’s stock was held by Christies’ in New York on 17 May 2006. The auction-related consideration was, however, only paid in June 2007, after proceedings had been issued against Amor by John Partridge, his wife Rosemary, and Murray Hallam. Frank Partridge had, as I have stated, left the company in 2004, and has since been in business on his own account. John Partridge stepped down as chairman in 2006 and is now retired.

15.

Messrs Mellor and Jemmett resigned as directors of PFA on 14 March 2008. In March 2008 Amor offered to purchase shares in PFA, which would take its holding up to a maximum of 90% for 28p per share. Some shareholders decided not to sell as, under the deferred offer, the price per share was to be 54.59p per share, a considerably larger sum. Mr Tager summarised the position by stating that, under the RPO, Amor was to pay, in round terms, £6.4 million for the shares and the claimants were to pay £1.5 million to qualifying shareholders.

16.

Despite injections of finance by the claimants or their bankers, PFA did not recover. The evidence is that it continued to experience significant financial difficulties and was forced to borrow heavily from sources other than its bank. Mr Law himself injected considerable sums to assist with the cashflow. The company’s loss on its ordinary activities in 2006 was £1.69 million on a turnover of some £13.5 million, a figure which was high because of the post-acquisition auction of stock in New York in 2006. As at 31 October 2006, PFA was owed £5.677 million by Amor, and it had a bank loan and overdraft which totalled £3.6 million. In 2007, its loss on ordinary activities was, in round figures, £1.75 million on a turnover of £6.47 million. The accounts record that, as at 31 October 2007, £5.3 million remained due from Amor, that the company had been lent £315,000 by Albert Amor Ltd (another of Mr Law’s companies), and the bank loan and overdraft had only slightly fallen to £3.3 million.

17.

On 20 July 2009, PFA went into administration. The immediate catalyst was that its principal banker, AIB, called in its £3 million loan facility: see Mr Law’s second statement, paragraphs 33 – 35, and an article in Antiques Trade Gazette on 8 August 2009. The first report of PFA’s joint administrators, Messrs Stoneman and Bond is dated 8 September 2009, six weeks after the beginning of the administration. It is stated that the commercial circumstances leading up to the administration included falling sales, cashflow pressures, poor trading, failed efforts to find an alternative banker, and “creditor pressure”.

18.

In October 2009 the shareholders gave notice to Amor and the claimants that they expected the deferred offer for the remaining 49% of PFA’s shares to be honoured by the expiry of the four year period on 14 December 2009.

19.

On 8 December 2009 Mr Law made a statement of PFA’s affairs as at 20 July 2009. In it, he valued PFA’s leasehold premises in New Bond Street at £10 million, the company’s goodwill at £250,000, and stock at £8 million. He estimated that there would be over £5 million available for distribution to the company’s members. The administrators did not accept his statement to be a fair representation of PFA’s financial position, and in particular considered that the estimated values that would be realised were significantly overstated: see administrators’ report dated 16 February 2010, paragraphs 4.2 – 4.3.

20.

Shortly after this, on 11 December, the shareholders instituted proceedings under the guarantee against the claimants. On 16 December, the claimants issued their original claim in these proceedings.

21.

Following a petition presented on 8 April 2011, on 12 July 2011 PFA went into liquidation and Messrs Andronikou and Kubik of UHY Hacker Young LLP were appointed its liquidators. The liquidators’ initial report is dated 24 August 2011. It stated that, as far as the liquidators were aware, the company’s only asset was the right of action advanced in the original claim.

III. The original claim

22.

The pleaded representations are:

(1)

The “reputation” and “Getty” representations: it is pleaded that “throughout the negotiations and discussions” John “repeatedly referred to” PFA’s high standing and reputation in its specialist marketplace, and placed “considerable emphasis on its ‘valuable and impeccable relationships’” with various institutions in the UK and overseas and, in particular, a “longstanding and ongoing relationship with the Getty Museum”: RAPOC, paragraph 19.

(2)

The “balance sheet” representation: it is pleaded that John encouraged the claimants and Amor to rely on the descriptions and stock values set out in the stock list with which they were provided, and on the financial information in the 2004 and 2005 balance sheets and the 2005 P/L, and in particular on the liabilities, including any contingent liabilities, of PFA as having been honestly or reasonably stated in the balance sheets: RAPOC, paragraph 22.

(3)

The “material contracts” representation: it is pleaded that during the final stages of the negotiation the claimants and Amor were encouraged to rely on information provided in successive drafts and the final form of the offer. It is also pleaded that John represented to the claimants and Amor that there were no material contracts entered into during the period 18 November 2003 – 12 December 2005 other than the two set out in the offer document: RAPOC, paragraph 23.

As presently pleaded these representations were by John Partridge only: see RAPOC, paragraphs 19, 21 and 23. However, in relation to the Amor-assigned claims RAPOC paragraph 7B relies on fraudulent misrepresentations “of John and Frank”. The claimants relied on seven particular transactions and their consequences in the period between the 1980s and 2004 to show what they allege are systematic fraudulent practices and (see RAPOC, paragraph 58C(1)) plead that, but for “the fraudulent activities of John and Frank, and their breaches of duty complained of herein, [PFA] would have deservedly held the reputation as represented by John”.

IV. The pleaded transactions

23.

I turn to the seven transactions and their consequences which are relied on by the claimants as evidence of systematic fraudulent trading practices. I summarise their salient features for present purposes. Chronologically, the first concerns what are described as the Frederick the Great armchairs. It is alleged that in the 1980s, John Partridge sold a pair of counterfeit chairs to the Getty Museum for £175,000, that the Museum made a complaint shortly after delivery but John Partridge refused to refund the price. The result was that what had been a long-standing relationship between the Getty Museum and PFA came to an end. It is not pleaded that John knew that the chairs were counterfeit, only that he had been procured to act by a Mr Hobbs, who it is alleged was a notorious dealer in counterfeit furniture. Frank Partridge is not involved in this allegation.

24.

The second transaction concerns a painting, A View of Cannes, sold to a Mr Relyea as by Sir Winston Churchill in February 1991. It is alleged that the painting was a known fake obtained from a Mr Sellin, now deceased, who the claimants allege was a known source of works of art of dubious origin. It is alleged that when John Partridge sold the painting to Mr Relyea, he dishonestly redacted all reference to the painting’s provenance and catalogue. It is alleged that Mr Henderson, at that time at PFA, informed John Partridge that the painting was a fake. The claim that PFA or John Partridge redacted the painting’s provenance is inconsistent with documents showing that the contents of the invoice to Mr Relyea were the same as the catalogue entry for the La Gallais auction house’s October 1989 auction in Jersey, where the painting was sold. That was the provenance provided to John Partridge by Mr Sellin: see letter dated 29 January 1990.

25.

Mr Relyea raised a question about the painting’s provenance in October 1998. By mid-1999 inquiries made by PFA of Lady Soames and Mr David Coombes, an expert on Churchill paintings, revealed doubts about its authenticity. It seems clear that, by then, PFA could not provide a better provenance than the one on the invoice. Mr Relyea has shown no sign of wishing to claim against PFA and any claim by him would now be statute-barred. Moreover, in March 2000, Mr Relyea asked John Partridge to find him another Winston Churchill painting. Two years ago, Mr Law’s evidence for the 2010 proceedings stated that a claim by Mr Relyea was very unlikely. It is now said by Mr Tager that, if it is shown that John Partridge conducted his business in a fraudulent manner, Mr Relyea’s position could change. The claimants’ case on fraud in this respect is that PFA acquired the painting from Mr Sellin with the notoriously bad reputation alleged by them and that, despite Mr Henderson’s expressed reservations to members of the Board about the authenticity of the painting in the light of his expertise and his conversation with Janet Green of Sotheby’s, John Partridge sold the painting as by Sir Winston Churchill.

26.

The third transaction concerns what are known as the Cave armchairs. PFA purchased these from Christies’ in 1992. The first allegation is that, after they had not sold for a considerable time, in order to make them more saleable Frank and John Partridge arranged for a cherub design on them to be replaced with a floral design, and at the same time altered the designs of the legs. This is said to be contrary to the British Antique Dealers Association’s by-laws. The second allegation is that the chairs were sold to Lord Kalms without disclosing the alterations. The date of the sale is not pleaded, but it would appear to be before 2004. Lord Kalms is quoted in a Sunday Times article published in January 2010. The words attributed to him indicate that he was not interested in taking proceedings, saying of the chairs, “if they are fake, big deal – it wasn’t a lot of money”. It is said that he may change his mind if it is shown that John Partridge was fraudulent.

27.

The fourth transaction concerns three tables sold to a very good customer of PFA’s, Mr Mavromatis. They are referred to in the pleadings as the First and Third Gueridon Tables and the Red Japanned Table. The first table was bought by Frank Partridge for PFA at a Christies’ auction for about £13,500. The allegation is that, in order to lend credibility to an intended deception, Frank Partridge had the table restored at a cost of some £11,000 so as to be able to pass it off as a genuine 18th century Gueridon, and then in September 1999 sold it to Dartmouth, a company controlled by Mr Mavromatis. The allegation is that Frank Partridge either knew the table to be counterfeit or took insufficient steps to establish whether it could be described in the way that it was.

28.

PFA had subsequently sourced and sold to Mr Mavromatis a genuine Gueridon table. It is alleged that the third Gueridon table was a copy of the second which was made on Frank Partridge’s instructions and fraudulently sold to Mr Mavromatis for £135,000 as an 18th century Gueridon table. There is some uncertainty as to the date of the sale of the third table. Frank Partridge’s evidence is that it was in about 2001, and the pleading states that a contingency should have been made in 2004 accounts which suggests that it was on a date before that year. It is also alleged, in reliance on the absence of a stock record and no money in PFA’s books, that Frank Partridge misappropriated the proceeds of sale.

29.

The Red Japanned Table was sold in January 1999 to Dartmouth for £135,000. It was sold as made by Bernard II van Risamburgh. It is alleged that Frank Partridge knew the table to be counterfeit or alternatively took insufficient steps to establish whether it could be sold as described.

30.

In 2008 Mr Mavromatis instructed Sotheby’s to sell items from his London house and Sotheby’s had expressed doubts about the three items. As a result Mr Mavromatis complained to PFA. His complaint about these items was not made public until these proceedings were started. On 5 April 2010 Frank Partridge bought the Third Gueridon Table from Mr Mavromatis for £250,000 in settlement of any claim Mr Mavromatis might have had against the company or otherwise in respect of the three items that Sotheby’s had doubted. The table bought by Frank Partridge is at present in Moscow on offer to a client who is considering whether to buy it.

31.

The fifth transaction concerns what has been described as The Greenberg Boulle Items. It is alleged that in December 1999, John Partridge sold a number of items including two pairs of Boulle pedestals and a pair of Boulle commodes to a Mr Greenberg, representing them to be authentic Boulle items from the period of Louis XIV and Louis XVI, rather than reconstructions incorporating 18th century elements. In October 2000, John Partridge sold Mr Greenberg a marriage coffre, which it is alleged he wrongly described as being Louis XIV circa 1700 rather than Regency, circa early 19th century. The pleaded allegation is that John Partridge knew these items were counterfeit and not from the period as described, or alternatively dishonestly elected to take no or insufficient steps to establish whether they could be so described. Mr Tager submitted that where a person does something although a contrary view had been expressed (in this case by Mr Henderson) without giving reasons that is evidence of fraud.

32.

When, in about February 2003, Mr Greenberg raised the issue of the age of these items with PFA, Frank Partridge was involved in negotiations with him. During these he offered to deal with the matter by buying back the items for approximately £800,000. It is alleged that the fact that he did this without getting an expert view is evidence of fraud. It was also alleged that Frank Partridge concluded the settlement with Mr Greenberg without obtaining the approval of PFA’s Board. It, however, appears from the Board minutes dated 17 December 2003 and 28 January 2004, that the matter was discussed at the Board and that the Board approved the settlement which was then concluded by John Partridge. It was shortly after the latter Board meeting that Frank Partridge left PFA.

33.

When Sotheby’s revalued PFA’s stock in 2005, before the purchase of PFA’s shares by Amor and the claimants, it stated that these items were not as described and were worth only about £118,000. That figure is recorded in the revaluation tables and in PFA’s books. These items were sold at the post-acquisition auction held by Christies’ for a total of US$646,400, a sum considerably greater than Sotheby’s valuation.

34.

The sixth transaction concerns what were known as the Bantry House Commodes. In 1989, Franses Ltd, which had acquired the two commodes in Ireland, sold a half interest in them to PFA for £32,800. The commodes were restored that year. Franses Ltd and PFA shared the cost. It is alleged that this restoration involved the removal of a fruitwood veneer and its replacement with ebony.

35.

The commodes did not sell, and in 2001 Frank Partridge told Mr Franses’s son that the previous restoration was unsatisfactory and that further work was needed. He proposed that they be sent to Paris and decorated with Boulle at a cost of about £100,000, which he said should have been done originally. Mr Franses did not believe that there had been original Boulle on the commodes, and suggested that consideration be given to less drastic restoration work. The disagreement about what work was needed and what had been authorised led to the purchase by PFA of S Franses Ltd’s half interest in the commodes. The work was then done and the commodes were offered for sale as “a very rare pair of Louis XIV Boulle and tortoiseshell commodes…circa 1710”. They were sold in 2002 to a Mr Wexner for £600,000. Frank Partridge informed Mr Wexner’s agent, Alex di Carcaci, that existing Boulle decoration had been “re-laid” and “re-engraved”, and that the items had been bought from a private collection in Paris.

36.

Subsequently, Mr Wexner complained about these items. PFA settled his claim in February 2009 on terms that Mr Wexner kept the items and was permitted to select stock from PFA’s shop floor to the value of £420,000, which he duly did. The five items were offered for sale at an auction at Christies’ on 4 June 2009. Three were sold, although it turned out that one of them had not been owned by PFA but had been held by it on consignment by a client. Mr Wexner received in settlement a total of £73,000 from the other items sold at the auction. He also received the unsold items for which bids had been received totalling £35,000, and he still has the commodes.

37.

The last of the transactions concerned a pair of mahogany card tables. These tables were bought for about £132,000 at auction by Frank Partridge in September 2003. They were bought as from the period of George III. The tables appear in Sotheby’s 2005 pre-sale stock valuation with a written-down value of between £50,000 and £75,000. It is alleged that before the auction other leading dealers had warned Frank Partridge that the card tables were not authentic. It is pleaded that Frank and John Partridge, knowing that the tables were not authentic, caused them to be heavily restored or reconstructed in order to sell them as from the period of George III, and that John Partridge prevented the claimants and Sotheby’s from examining the tables before the acquisition by Amor and the claimants. Mr Tager described this transaction as an attempted fraud, because PFA was sold before the fraud was completed, but that the card tables had been grossly overvalued in the accounts, and thus became the instruments of fraud.

38.

It is not pleaded that Frank Partridge acted dishonestly at the time of the acquisition, only that he was negligent or reckless: RAPOC, paragraph 33. The tables, which are said to have previously belonged to the Earl of Sefton, are included in Beard and Goodison’s English Furniture 1500 – 1840, published by Christies’, and described as c. 1755. In the light of this, although Mr Law’s evidence is that Beard and Goodison’s work has been overtaken and is now not regarded as an authority, a claim of recklessness or even negligence faces difficulties. Mr Tager stated that this allegation is now pursued only against John Partridge.

39.

The evidence is that the tables went to be restored in 2005, well after Frank Partridge left PFA. The documentary evidence in the form of the restorer’s invoice is that the restoration was completed in late April 2006. The restorer’s evidence is that the restoration was undertaken on Mr Law’s instruction, and it is undisputed that Mr Law paid the invoice. Mr Law’s evidence, however, is that he first saw the tables three-quarters of the way through the restoration process, and he stopped further work. The tables were subsequently sold to the first claimant for £12,000.

40.

Before turning to the submissions, I should refer to the abandoned “pension representation” claim. This concerns a claim by Mr Clifford Henderson against the company in respect of his pension. The re-amended Particulars of Claim pleaded that during the negotiations the first claimant, Mr Mellor, specifically raised this issue with John Partridge, and John Partridge said that the claim was fanciful. It is pleaded that at that time John Partridge knew that the Pension Advisory Service had given a unanimous ruling in favour of Mr Henderson and that John Partridge failed to inform any of the claimants or Amor of this finding or the September 2005 preliminary finding in favour of Mr Henderson by the Ombudsman. It is surprising, in view of the documentary evidence obtained as a result of a third party disclosure order made by Master Cook on 8 March 2012, that this part of the case was not abandoned before the hearing.

41.

The documents disclosed by Farrers, PFA’s former solicitors, show that Farrers’ due diligence response to Denton Wilde Sapte, then acting for Amor and the claimants, disclosed the existence of the dispute and the determination of the Ombudsman, and that Denton Wilde Sapte responded that one of its pensions people would “cast an eye” over the material. Later in October, a lawyer at Farrers informed Denton Wilde Sapte that £125,000 was the sum estimated to be required to purchase an annuity in favour of Mr Henderson. In the light of this, it is troubling that such serious allegations are pleaded in circumstances in which the factual position is so totally different to the pleaded case. It thus transpires that the only significant new allegation in the re-amended pleadings is one that cannot properly be advanced. The documentary material setting out the true position was or should have been available to the claimants and their legal advisers before this allegation was inserted into the pleaded case. The most recent statements by Mr Law and Mr Mellor seek to address the matter. They now state that Mr Partridge was asked about the matter because of the due diligence information, that his response was that this was in effect lawyers’ stuff and nonsense, and that they relied on his categorical assurance: see Mr Law’s statement dated 27 April 2012, paragraph 151. Mr Mellor’s statement of the same date stated that if John Partridge said one need not concern oneself; that was good enough for him. Be that as it may, over two months have passed since Master Cook’s order. Once the documents were obtained the total unsustainability of the pleaded case was clear but this part of the case was not abandoned until the second day of the hearing.

V. Discussion

42.

There is common ground as to the applicable principles. The court must consider whether the claimant has a realistic as opposed to a fanciful prospect of success. It must not conduct a mini-trial. It must take into account not only the evidence actually placed before it on the summary judgment application, but also evidence that can reasonably be expected to be available at trial: see Royal Brompton Hospital NHS Trust v Hammond (No. 5) [2001] EWCA Civ 5550. The bar on mini-trials does not, however, preclude the court from ever rejecting the evidence of one party. Mr Tager did not take issue with Mr Brisby’s submission that this could be done where the evidence is internally inconsistent, contradicted by contemporaneous documentation, or is inherently incredible.

The defendants’ submissions

43.

Mr Brisby submitted that the entire claim should be struck out because the claimants are pursuing pointless and wasteful litigation. He relied on Jameel v Dow Jones [2005] QB 946 at [54] – [69]. He submitted that the claims are exaggerated; they will be very expensive to try because of the number of different experts that will be required on matters where there is significant room for differences of opinion. He also submitted that the case will be very difficult to try because of the age of the events and because some of the items in the transactions relied on for the allegation of systematic fraudulent conduct are unlikely to be available for inspection. He also submitted that, even if some liability is established, there is unlikely to be a substantial damages award. Finally, he relied on the fact that no steps were taken after Mackay J’s judgment until the sudden abandonment of the application for permission to appeal, and that thereafter matters have been pursued in a dilatory way, with the amended Particulars of Claim only being served ten months later.

44.

Mr Brisby submitted that the claimants’ personal claims and claims as assignees against Frank Partridge should all be struck out as either fanciful or clearly time-barred.

45.

As far as the misrepresentation claims of the claimants personally and as assignees of Amor against John Partridge, he submitted that the case was really one of deceit by non-disclosure. He argued that, as what is said to have been concealed are systematic fraudulent trading practices as opposed to transactions in respect of which claims might be raised, it is a claim that John Partridge did not disclose material which would destroy or seriously damage the company’s reputation. He submitted that because the claim has to be based on the cumulative effect of the transactions, there is no real prospect of showing, on the basis of the pleaded transactions, that the whole of PFA’s business was infected by the systematic practice of fraud from the 1980s. He also submitted that since the shares were only bought after extensive due diligence conducted by professional advisers, the claimants are very unlikely indeed to be able to show that they relied actively on what John Partridge is alleged to have said.

46.

Secondly, he submitted that, as a result of the principle prohibiting recovery of losses claimed by a shareholder which are merely reflective of losses suffered by the company, the claimants cannot seek damages either personally or as assignees of the Amor claims, which merely reflect the fact that the company was not worth as much as it would have been had the alleged wrongs to it not been committed.

47.

In relation to the claims brought against John Partridge by the claimants as assignees of PFA, Mr Brisby submitted that it is not pleaded that John Partridge was involved in the sale of the commodes to Mr Wexner, and there is no potential claim by PFA in respect of that. He relied on the settlement by the company of the Greenberg dispute in 2004, and the knowledge of the company, in the shape of the Board, of what had happened and why Mr Greenberg had raised his claim, so that any claims against John Partridge are time-barred.

48.

In relation to the card tables, the only possible loss to the company caused by John Partridge was in respect of the some £11,000 cost of restoration, but on the evidence the overwhelming likelihood is that this took place after the acquisition of PFA by the claimants, with the consent of Mr Law.

49.

In relation to the sale of the Cave armchairs, Mr Brisby submitted that PFA has suffered no loss, and that in the light of the absence of any evidence that a claim may be made by Lord Kalms, and the position taken by Lord Kalms, it is fanciful to say that there is a contingent liability which should be litigated.

50.

In respect of the painting sold to Mr Relyea, Mr Brisby submitted that the evidence comes nowhere near showing a prima facie case of fraud, in the light of the previous sale of the painting as a genuine Churchill, and the provenance supplied by the Jersey auctioneer. Both Mr Relyea’s claim against PFA and PFA’s claim against John Partridge are, he submitted, time-barred, the latter because even on the claimants’ evidence PFA knew of the alleged wrong. In respect of the sale to the Getty Museum of the armchairs, any claim by the Museum against PFA depends on a substantial extension of the limitation period, and the company’s claim against John Partridge is also long since time-barred.

The claimants’ submissions

51.

Mr Tager accepted that the claimants faced difficulties, and in some cases considerable difficulties, in establishing their claims. He, however, submitted that this was a case that should go for trial because of the extent to which it depended on assessments of the credibility of Mr Law and John Partridge, and other witnesses, in particular Mr Henderson, as to what was said in the negotiations with the claimants, and the intentions in relation to the transactions relied on by the claimants to show systematic fraudulent trading practices. He relied on the statement of Lewison J (as he then was) in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15(vi)] that “although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment” and that “the court should hesitate before making a final decision without a trial, even where there is no obvious conflict of facts at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to the trial judge and so affect the outcome of the case”. He also relied on the statement of Lord Steyn in Smith New Court v Citibank (albeit in the context of the position of a trial judge) that in making findings of credibility and reliability, it is unsafe to compartmentalise the case and that “an initial and provisional conclusion that a witness is not credible may be falsified when considered against the possibilities, probabilities and certainties emerging from the whole body of evidence before the court”.

52.

As to the difficulties that result from faded memories, missing documents and the unavailability of objects for inspection, Mr Tager argued that those issues will affect both parties and that, unless there is an available limitation defence, the consequences of the passage of time are matters to be taken into account by the court trying the case rather than grounds for striking it out. He argued that issues of expense and proportionality are matters for case management rather than striking out.

53.

On the original claim based on misrepresentation during the negotiations, he submitted that the claimants’ case was one of a partial statement of fact, as to PFA’s reputation, which was falsified by the withholding of that which was not stated. He argued that it was a case falling within the scope of misrepresentation as discussed in Peek v Gurney (1873) 6 APCAS 377 at 386, 389, 391 – 392 and 403, and Smith New Court Securities v Citibank NA [1997] AC 254 at 267 per Lord Brown-Wilkinson. So, the repetition of statements about the high standing and excellent reputation of PFA without disclosing the difficulties that had been encountered with customers in the underlying transactions, particularly in the immediate past, he submitted, amounted to a positive misrepresentation. Again, the absence in the balance sheets of provision for contingent liabilities based on those transactions, he submitted, meant that the balance sheets and accounts contained misrepresentations.

54.

As to reputation and goodwill, Mr Tager submitted that there were two aspects to this. The first was that, had the claimants known about the transactions which are said to show systematic fraudulent conduct, they would not have purchased the shares. Secondly, in relation to PFA’s assigned claims, that conduct meant not only that the business lost its ability to trade and trade profitably, but it lost the custom of particular, and in some cases such as the Getty Museum and Mr Mavromatis, valuable customers, and their friends who would be dissuaded from dealing with PFA as a result of what the dissatisfied customers said.

55.

Mr Tager also submitted that, since the underlying assigned PFA claims will have to be investigated in relation to Amor and the claimants’ claims against John Partridge based on the representations, there is a reason for those claims being tried. Also, even if the defendants succeeded at trial on a limitation defence in respect of the Greenberg Boulle Items, the transaction is relevant because there was no reference to the £800,000 compensation in the 2005 profit and loss account, it was not provided for as a contingent liability in the 2004 balance sheet, and the settlement was a material contract which should have been disclosed.

Conclusions

56.

Applying the principles I have summarised at [42], I have reached the following conclusions. First, the claims against Frank Partridge should all be struck out. No claim based on misrepresentation to Amor or the claimants is made against him. As to breach of his duties to PFA, he was not involved in the sale to the Getty Museum, to Mr Relyea or in the initial sale of the Boulle pedestals and commodes to Mr Greenberg. Mr Tager stated that claims in respect of the card tables are not now pursued against him.

57.

In respect of the transactions in which he was involved, it is important to note that he ceased to be a director or employee of PFA more than eight years ago. No claims have been made against him since his departure, either by PFA or by its administrators or liquidators before 31 January 2012 when the second claim in these proceedings was issued. Unless he can be shown to have been fraudulent the limitation period has expired. Moreover, the documentary evidence shows the Greenberg settlement in 2004 was concluded by John Partridge after the two Board meetings. Although Frank Partridge did the early negotiations, it is fanciful to say that his failure to inform the Board as opposed to the circumstances of the initial sale (in which he was not involved) caused loss to PFA.

58.

As for the Cave armchairs, unless Lord Kalms makes a claim there is no loss to PFA. On the evidence a claim by Lord Kalms is “fanciful”. If, however, he should decide to bring a claim against the liquidators, as a result of section 10 of the Limitation Act 1980, it will be possible for them to seek contribution from Frank Partridge pursuant to the Civil Liability (Contribution) Act 1978 provided they do so within two years of any judgment. Mr Brisby relied on this possibility in respect of all the claims brought as assignees of PFA in respect of contingent losses to the third parties who dealt with it in the transactions relied on by the claimants. In no case is there any evidence that there is a possibility of such claims. In the case of a number, including Messrs Relyea, Mavromatis, Greenberg and Wexner, the evidence (in the case of the last three, the settlements) strongly suggests there is no such possibility. Mr Tager submitted all may change if fraud on the part of John and Frank Partridge is established. That does not, however, follow, but if it does, as a result of section 10, there will be no injustice to PFA’s liquidators.

59.

Secondly, it follows that all the claims as PFA’s assignee against John Partridge in respect of contingent liabilities to third parties arising out of the transactions should also be struck out. John Partridge was not involved in the sale to Mr Wexner. Mr Greenberg settled his claims against PFA in 2004. Apart from the settlement, as PFA’s Board knew the facts at that time, any claim is time-barred. Any claim by PFA against John Partridge in respect of the Cave armchairs is, for the reasons I have given in relation to Frank Partridge, “fanciful”, as is a claim by Mr Relyea in respect of A View from Cannes.

60.

Having dealt with claims as PFA’s assignee in respect of contingent liabilities to third parties, what remains are claims by PFA for other losses. Such losses include claims for losses to the company’s reputation because of the way the business was conducted by John Partridge. It also potentially includes losses to the company by expenditure incurred as a result of breach of fiduciary or contractual duty. So, in relation to the claim concerning the restoration of the card tables, assuming that John Partridge was responsible for arranging the restoration, as Mr Brisby recognised, PFA’s claim would be for about £11,000. In relation to the loss to the company’s reputation, notwithstanding the difficulties of establishing systematic fraudulent trading practices on the basis of the seven pleaded transactions, I have concluded that it would not be right to strike out this part of the claim. Similarly, notwithstanding the difficulties the claimants may face in establishing that John Partridge was responsible for the restoration of the card tables, I do not consider that that part of the claim should be struck out.

61.

I turn to the misrepresentation claims brought against John Partridge by the claimants personally and as the assignees of Amor. It is clear that, at the time of the 2010 strike-out proceedings, Mackay J assumed that there should be a trial of the claims brought by the claimants personally. It is, however, clear that those who act for John and Frank Partridge, and for other members of the Partridge family, on that occasion and in that application were acting only for Frank Partridge and the other seven defendants. The application was only made on their behalf. In any event, as Mr Brisby submitted, whatever the position, it is open to John Partridge to change his mind and make a strike-out application now. I have referred to the difficulties of establishing systematic fraudulent trading practices on the basis of the seven pleaded transactions and their consequences. Notwithstanding those, and the undoubted force of Mr Brisby’s submission that the reputation representation claim is an unsustainable case of pure non-disclosure, I have concluded that it would not be right to strike out this part of the claim on that ground.

62.

I do, however, accept Mr Brisby’s submission that to a large extent the personal claims by the claimants and their claims as Amor’s assignees should be dismissed as a result of the rule against reflective loss which precludes a person from recovering against a defendant wrongdoer a loss which is merely reflective of a loss suffered by a company in respect of a breach of duty by the defendant which is owed to the company. Neuberger LJ (as he then was, with whom Mance LJ and Bodey J agreed) summarised the law in Gardner v Parker [2004] EWCA Civ 781 at [33]. He stated that the effect of the decision of the House of Lords in Johnson -v- Gore-Wood & Co [2002] 2 AC 1 was, subject to two qualifications by the Court of Appeal ([2003] Ch 618 at [61] and [62] which are italicised), accurately summarised by Blackburne J at first instance in Giles -v- Rhind [2001] 2 BCLC 582 in the following terms:

"(1)

a loss claimed by a shareholder which is merely reflective of a loss suffered by the company – i.e. a loss which would be made good if the company had enforced in full its rights against the defendant wrongdoer – is not recoverable by the shareholder save in a case where, by reason of the wrong done to it, the company is unable to pursue its claim against the wrongdoer;

(2)

Where there is no reasonable doubt that that is the case, the court can properly act, in advance of trial, to strike out the offending heads of claim;

(3)

The irrecoverable loss (being merely reflective of the company’s loss) is not confined to…diminution in the value of his shareholding in the company, but extends…to ‘all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds, and also to other payments which the company would have made if it had had the necessary funds, even if the plaintiff would have received them qua employee and not qua shareholder, save that this does not apply to the loss of future benefits to which the claimant had an expectation, but no contractual entitlement’;

(4)

The principle is not rooted simply in the avoidance of double recovery in fact; it extends to heads of loss which the company could have claimed but has chosen not to, and therefore includes the case where the company has settled for less than it might…;

(5)

Provided the loss claimed by the shareholder is merely reflective of the company’s loss, and provided the defendant wrongdoer owed duties both to the company and to the shareholder, it is irrelevant that the duties so owed may be different in content.”

63.

It is clear from Gardner v Parker that the rule against reflective loss applies to a claim for breach of fiduciary duty (see [37] – [43]) and (see [49]) that it applies where, in its absence, both the claimant and the company would be able to recover effectively the same damages from the defaulting defendant/director. Neuberger LJ stated (see [70]) that the rule is not limited to claims brought by a person in his capacity as a shareholder. In this case, as in that, the three claimants are or were at the material times, shareholders, although Neuberger LJ also stated that it is “hard to see why the rule should not apply to a claim brought by a creditor (or indeed an employee) of the company concerned even if he is not a shareholder”.

64.

Since a claim has also been brought by the claimants as the assignee of PFA there is no question of the company being unable to pursue its own claim against the alleged wrongdoer, so that the first of Chadwick LJ’s qualifications to Blackburne J’s formulation (the italicised words in (1)) does not apply. I accept Mr Brisby’s submission that, in this case, the principles mean that the claimants (and Amor) cannot claim in respect of damages suffered because the acquired shares which were worth less than they would have been had it not been for the alleged wrongs, and cannot claim in respect of “all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds”; that is, Mr Law’s claims for further investment which was lost.

65.

I also accept Mr Brisby’s submissions about the balance sheet misrepresentation claim. It relies on the 2004 balance sheet, but since, by the time of the offer, the 2005 balance sheet and Sotheby’s write-down were available, it is not sustainable. As far as the complaint that provision was not made for contingent liabilities, given the absence of any real possibility of such liabilities and no evidence that PFA considered that claims in respect of the specified transactions would materialise, there was no obligation to make such provision. Where there was a dispute which led to activity, this was reflected. The three Greenberg items were specifically written down, and provision was made for items bought back. Moreover, the company’s stock had been independently re-valued by Sotheby’s before the negotiations.

66.

Finally, since the claimants accept that they were given access to the company’s records, including Board minutes and the compromise agreement, the material contracts representation claim is entirely unsustainable. The claimants’ advisers may not have sought to examine all the records that they were given, but they were available for them to examine.

67.

For these reasons and to this extent, these claims are struck out.

VI. Postscript: the “English v Emery Reinhold” submissions

68.

At the conclusion of the hearing on 17 May, although Mr Tager informed me that he would be away, I was asked, if possible, to give judgment in the following week. I was told that, if I did, another counsel would attend on behalf of the claimants. It was anticipated that this would be a “read-out” judgment. I completed a judgment to read out on the morning of 24 May, the day it was listed, but it was not short. In order to avoid the need for counsel to take a note of it, I decided it would be helpful to circulate the draft judgment to the parties’ legal representatives. I was able to do so about two hours before the time listed for the judgment to be handed down. The draft did not deal with the defendants’ application that, as a condition of proceeding with any part of the claims, the claimants should be required to make a substantial payment into court. I anticipated dealing with this as one of the post-judgment issues.

69.

At the hearing, Mr Webb attended on behalf of the claimants. He was not accompanied by the solicitor who had attended the hearing. Mr Webb asked me not to hand down the judgment because he had anticipated a “read-out” judgment and was not in a position to make “English v Emery Reinhold [2002] EWCA Civ 605 submissions” in accordance with his duty to raise perceived material omissions so I could deal with them. If this was a difficulty, it should have been appreciated by Mr Tager at the time of the discussion at the conclusion of the hearing. Mr Webb and the claimants would, in fact, have been in the same position had I not circulated a draft but simply read out my judgment. Mr Greenwood, on behalf of the defendants, did not, however, oppose this application, as it turns out because the defendants also wished to make English v Emery Reinhold submissions. In view of the position taken by Mr Greenwood, I did not hand down the judgment but set a timetable for the receipt of any English v Emery Reinhold submissions. The timetable was not adhered to, but I subsequently received submissions totalling, in the case of the claimants, 23 pages, and in the case of the defendants, 30 pages.

70.

It was submitted by Mr Tager on behalf of the claimants that the judgment was, in a number of respects, “either unclear or confusing, or based on conclusions regarding the nature of [the claimants’] pleaded case, the relevant underlying facts, and an erroneous and inadequate explained application of the reflective loss principle”. I was invited to revisit a number of my conclusions and to provide reasons or additional reasons for a number of my conclusions.

71.

Mr Brisby, on behalf of the defendants, observed that the defendants’ submission that the claims based on misrepresentation should be struck out on the ground that the losses allegedly suffered by the claimants were not caused by either the alleged misrepresentation or the alleged underlying fraud, but by PFA’s pre-existing precarious financial position, was not expressly addressed in the judgment. He invited the court either to clarify its reasons for rejecting that submission or to adopt it. He also submitted, with respect to the conditional payment issue, that the court should either accept the defendants’ submission or state its reasons for rejecting it.

72.

As to conditionality, Mr Tager did not make any submissions in response to Mr Brisby’s post draft judgment submissions. While, in all the circumstances of this case, I am minded to order payment into court of a sum by the claimants, I indicated to the parties that I would hear further submissions after this judgment is handed down. If, after doing so, I conclude that such a payment is required, I will give the claimants an opportunity to adduce evidence as to their means before determining the amount of the payment.

73.

As to causation, Mr Brisby was correct in the assumption in his submissions that I had concluded that the misrepresentation claims should not be struck out on the ground of lack of causation. On the assumption that the claimants established that representations were made which induced the execution of “the instrument” and “the RPO” (as to which see [61]), I considered that it is not fanciful at this stage for the claimants to claim that losses were caused by those representations. This is a matter to be determined at trial after hearing and scrutinising the evidence in a way that is not appropriate in a strike-out action. Only at that stage will it be possible to determine whether there is a problem of causation and, if so, whether it precludes any recovery or whether only part of the claimants’ losses should be disregarded on the ground that they are the result of the claimants’ subsequent conduct in running PFA.

74.

I turn to Mr Tager’s submissions. In relation to the claims against Frank Partridge, the facts relating to the items sold to Mr Mavromatis and Mr Wexner are respectively summarised at [27] – [30] and [34] – [36], but the only reference to the claims against Frank Partridge in respect of these items in the discussion section is at [58]. The claim against Frank Partridge for misappropriating £135,000 is referred to at [28].

75.

In relation to the items sold to Mr Mavromatis, in addition to what is stated at [58], the reasons for my conclusion that the claim should be struck out are the settlement made by Frank Partridge and Mr Mavromatis referred to at [30] and the fact that PFA had knowledge of the material facts before the sale of its shares to Amor. In relation to the items sold to Mr Wexner, I refer to PFA’s settlement in 2009 and its consequences at [58]. Additionally, there was no loss to PFA because, in effect, it paid back part of what it had received from Mr Wexner, but the sum retained was greater than the sum the claimants maintain was spent on the acquisition and restoration of the items. Additionally, the settlement post-dated the transfer to Amor and any loss resulted from the terms of that settlement for which it is not arguable that Frank (or John) Partridge was responsible. The claim for misappropriating the £135,000 received from Mr Mavromatis is struck out because it has no foundation in the facts pleaded, a pleading which asks the court to “infer” that the money was misappropriated, a term used in this context to mean “stolen”.

76.

I turn to Mr Tager’s other submissions. The first is that [57] and [60] do not adequately deal with the claims against both defendants in respect of the wasted costs and expenditure in respect of the teims sold to Messrs Mavromatis and Wexner. The only relevant pleaded claim is for the work done on the items sold to Mr Mavromatis and the costs of settling the dispute with Mr Wexner. I do not consider that additional reasons are necessary to the treatment of these matters in [57] and [60] and what I have stated about those items at [75].

77.

Secondly, Mr Tager invited me to revisit my conclusions as to losses struck out as a result of the reflective loss principle. The only claims that are struck out are claims that are clearly within the principle. Given that, I did not at first consider that further reasons are needed in this section of the judgment. However, having considered the submissions made, I observe that the pleaded case (see, for example, paragraph 58B(1)) does appear to claim damages in misrepresentation that relate to the diminished value of the shares of PFA as a result of the alleged fraudulent trading practices. Secondly, the reference in [63] to the principle applying where both the claimant and the company would be able to recover “effectively” the same damages is because, as stated in Mr Brisby’s post-hearing submissions, in the light of the passage at [33(5)] from Gardner v Parker I have quoted at [62], it is not necessary for the company to be entitled to make the very same claim on the very same basis as the shareholder.

78.

Mr Tager’s other submissions concern the balance-sheet and material contracts representations. My reasons for striking out the claims based on these representations are given at [65] – [66]. Although they are brief, in the case of the balance-sheet representation I refer to (and accept) Mr Brisby’s submission that, because the 2005 balance-sheets and Sotheby’s write-down were available at the time of the offer, the claim is not sustainable, and becomes no more sustainable if reformulated as a claim based on the 2004 balance-sheet. For the reasons given in [58], there is no real possibility of claims in respect of contingent losses to the third parties who dealt with PFA, and thus there was no obligation to make provision for them in the balance-sheet. As to the material contracts representation claim, the effect of the settlement with Mr Greenberg was reflected in the accounts and the returned items were subsequently written down in value before they were sold at auction in the circumstances described at [33].

Mellor & Ors v Partridge & Anor

[2012] EWHC 1415 (QB)

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