William Clark Partnership Ltd v Dock ST PCT Ltd

witness statement from the claimant solicitor, Mr Riley. The defendant has not had the

B opportunity fully invitation, the defendant has addressto consider the application ed the application today on the basis, as I made or to respond to it with evidence but, at my

clear at the outset, that if I considered that it was necessary fairly to deal with the

application to give it the opportunity to put in evidence, then it could do so by adjournment. In the circumstances that have arisen, that has not been necessary.

property in Fleetwood, Lancashire for use as a doctors’ surgery.

D the claimant’s breach of dutyfailure to provide valuations, the contr. It is said that, asactor on the project commenced adjudication a consequence of the claimant’s alleged

proceedings against the defendant as the employer which it was, in effect, forced to

compromise, as a result of what it says were the claimant’s breaches. I should observe that is not pleaded in the defence and counterclaim that in consequence of the claimant’s breaches it was not financially able to defend in a position effectively to defend itself because of the claimant’these claims, rather is breachest is said that it was not .

E

4. The claimant’s response in the reply in defence to counterclaim raises a wide number of matters, and liability is vigorously denied, as is causation. In paragraph 6(c), in the

summary of the claimant’s position, there is a positive allegation that the defendant’s losses have been caused by its own actions or those of its principal director and sole

shareholder, a Mr Abbot. The defendant is put to strict proof in respect of the uses of F the project monies and/or funding, and it is said that Mr Abbot reduced the contract sum to an artificially low level. One of the key issues in this case arises from the fact that the project was financed by monies advanced by a commercial funder, Aviva. It is said by the claimant that, at the defendant’s insistence, the project cost was reduced to an

artificially low level to enable to the defendant to use part of the Aviva funding to discharge a charge held by a previous funder.

G 5. It is also said by the claimant that the defendant misapplied the funds provided by

Avivathe witness statement of , and used some of those funds for Mr Crewdson of the claimant, in particular other purposes. That is made crystal clear in in paragraphs 86 to

88 entitled, “Misuse of Aviva funds,” where Mr Crewdson refers to evidence that funds were misused and says in terms in paragraph 88 that, in his view, if these monies had been paid as required under the loan agreement, all parties would have been paid, including the contractor Parkinson, and the adjudication would have been avoided.

“Please provide particulars (preferably in the form of an outline balance sheet

of incoming funds from Aviva and any other lending/funding sources, and

B outgoing projectamount of funding the defendant s expenditure, and any other expenditurereceived in respect of the ) oprojectf: (a) the total …and (b)

the use to which the total amount was put.”

7. The answer provided in September the period 1^st January 2011 to 1^st April 20132014 said that , setting out “a copy of the defendant’s account for inter alia the use to which the

loan was put is attached hereto”. Unfortunately, it is not entirely clear what, if anything, C was actually attached as the account referred to. I have been told that there is some correspondence reflecting the fact that the document, whatever it was, was too bulky to be emailed, and that it was going to be provided by other electronic means or in hard copy. However unfortunately, because this point has only recently been discovered,

neither of the solicitors are able to say definitively what, if anything, was provided. What is clear is that, at the time, the claimant’s solicitors were not claiming that what

D had been said was being attached had not been sent or received, and no further steps were taken in that regard at that time. In parenthesis, I should note that it is common

ground between the parties, rightly so, that if on further investigation it transpires that

nothing was sent then of course, it should now be sent, and there can be no argument about that.

8. However what subsequently happened was that after a review of the disclosure exercise, E in late October 2014, the claimant’s solicitors asked for disclosure of bank statements and balance sheets on the basis that they were relevant to the counterclaim. Initially it was said that they would be provided and subsequently it was said that although they were not relevant nonetheless they were provided in order, it was said, to put the

claimant’s mind at rest, so thatmid-November 2014. They are attached to Mr bank statements and balance sheets were provided in Riley’s witness statement in support of

F the application.

9. Nothing more was heard of the matter until 15^th January 2015, when the claimant’s

remained of the view that the Aviva funds were being used for “your client’s personal use” and that this misappropriation “caused your client’s inability to pay the final G account monies.” They also said:

“We consider this point requires further instruct a forensic accountant to review the information and produce a reportinvestigation. We are taking steps to .

We intend to apply for permission to do so, but we invite your consent.”

There was no substantive response to that letter and, on 3^rd March 2015 Kennedys wrote again to say that they now have the draft report, which they said had identified a significant shortfall between the expenditure received and expenditure incurred. In order for a full analysis of your client’s accounts to be carried out they asked for the following additional information: firstly details of the cheques issued on that account over the

accounts to which payments had been made from the bank account were requested. B 10.It is clear that all of these requests came from the draft report from the expert accountant

instructed by the claimant, which was subsequently disclosed on a voluntary basis later

in March 2015, and which I have seen. The instructions to the accountant were to consider various documents and to comment on the allocation of the Aviva drawdowns,

and specificallyuses outlined in the Aviva loan agreement. It was the preliminary view of the expert to comment on whether the Aviva funds had been misused beyond the

C that this was indeed the case, but it was the further documents which he said he needed to complete the picture which were requested.

position, and in particular its appreciation of its financial position as at the time the reduction in the contract cost was discussed and agreed and also as at the time the

settlement with the contractor was entered into is relevantcausation but also to the issue of breach. It is said that these are matters which Judge , particularly to the issue of

E Raynor effectively directed should be dealt with properly in August 2014 and that this application is really no more than completing the process. It is said that what is required is relatively limited further information to enable the accountant to complete the

exercise of showing the financial position and what happened to the Aviva funds. It is accepted that it would not be a relevant question for trial to investigate whether or not

the defendant did breach its obligations to Aviva, and there is no suggestion that this is F said to be relevant to an attack on credibility. It is said, in terms, that it is a sensible and proportionate step to take in relation to the investigation of causation and, to a limited extent, breach of duty. It is also said that the costs are relatively limited; Mr Riley, in his witness statement, suggests that they are a few thousand pounds.

13.The defendant resists the applications, firstly on the grounds of irrelevance and secondly

G on the grounds of delay and costrelevant at all it is really only of tangential relevance. In short, it is said t. hatThat is particularly so in in so far as this question is

circumstances where, in his witness statement for that it is the case that monies provided by Aviva were not used solely for the purposes of trial, Mr Abbott has accepted in terms this project and that the account was treated as a general business account. However he

says that there was nothing wrong with this, and that this was not the cause of the

its financial position was at the time the settlement with the contractor was entered into,

investigation. It seems to me that this case is not going to turn on, nor does it require, an

extensive blow-by-blow analysis of the defendant’s financial position, in particular whether or not it would have been different or better if, at various stages, certain monies

had not been used for purposes not connected with the developmentexample, as it is said by the claimant that the defendant could have settled with . Insofar, for

said to be a limited exercise, nor can the request to provide full details of all movements in relation to director’s loan accounts and other accounts, as well as information relating E to at least three other accounts.

F trial. Although it may well be the case that the costs of completing the report, so far as the claimant’s forensic accountant itself is concerned, is limited, that does not take into account the time and cost involved on the defendant’s side in obtaining this information,

nor expert evidence, if necessary, of the potential need for the defendant to obtain its own exphaving to be heard at trial. I am also conscious of the fact ert evidence and oral that the trial timetable is tight anyway, and to overload this trial with potentially G contentious forensic accounting exercise, in the context of the type of blow-by-blow financial analysis that Miss Coulter has intimated, runs the risk of potentially derailing that trial timetable.

(Discussions as to further directions follow)

B ___________________

C

D

E

F

G