BPC Hotels Ltd & Ors v Brooke North (A Firm)

This is an application by the Defendant for summary judgment in relation to the whole of the Claimants’ claims begun by a Claim Form issued on 11 November 2014 and set out in Particulars of Claim dated 12 November 2014 which were issued on the following day. For convenience, I will refer to these as the “new claims” or the “new proceedings”. The basis of the application is that the claims of professional negligence made against the Defendant in the new claims, which relate to advice given between 2000 and 2003 (inclusive), are bound to fail on the ground that they are statute-barred because the Claimants have no prospect of showing that there was deliberate concealment by the Defendant so as to postpone the running of time under the Limitation Act 1980.

The First Claimant is a limited company of which the Second and Third Claimants are directors and, indirectly, as I understand it, shareholders. The driving force behind the First Claimant is the Second Claimant and for the rest of this judgment I shall either refer to them indiscriminately as the Claimants, or, where appropriate, as Mr. or Mrs. Chandra.

The background to these claims can be summarised very briefly. Mr. and Mrs. Chandra built up and sold a successful business in relation to nursing homes. Using the proceeds from the sale of that business, in 1998 they bought a Grade II listed building known as Princess Court in Manchester for £1.5 million for the purpose of developing it into a new four star hotel under the Holiday Inn franchise. The First Claimant (“BPC”) was a special purpose vehicle whose role was to be the employer under a building contract for the development and conversion of the building.

Having obtained development funding from the Royal Bank of Scotland (“RBS”) to the extent of £10.65 million, the Claimants engaged Costain Ltd (“Costain”) as the main contractor for the development. Following a letter of intent the building contract with Costain was concluded on 30 April 2001 with a contract price of £10.6 million (excluding VAT). The contract completion date was 7 July 2002.

Under the terms of the finance agreement with RBS the Claimants had to put in significant funds themselves before they could draw down under the agreement. In July 2001 RBS provided overdraft facilities, limited to £300,000 repayable on demand, to assist BPC with its cash flow.

On 18 July 2001 a Deed of Warranty was executed by Costain, BPC and RBS. For the purpose of this judgment it is not necessary to set out the terms of the Deed of Warranty because it is sufficient to note that, unusually, its terms were such as to have the effect of requiring RBS to step in as employer under the building contract if Costain became entitled to terminate the building contract (as against BPC) and did so.

The terms of the Deed of Warranty were unusual in that the obligation upon RBS to step in (by its nominee) as employer under the building contract in place of BPC was mandatory, rather than being an option open to the bank as is more commonly the case. The so-called mandatory step in provisions under the Deed of Warranty are central to these actions because it is Mr. and Mrs. Chandra’s case that they were wrongly advised by the Defendant in relation to the Deed of Warranty at almost every relevant stage in the proceedings.

The new claims with which this application is concerned are to be contrasted with the “existing claims”. The existing claims are the subject of two actions against the Defendant brought by Claim Forms issued on 18 May 2009 and Particulars of Claim dated 11 September 2009. The latter were settled by counsel.

Unfortunately, things went badly wrong for the Claimants. On 20 May 2003 BPC had to pay £672,146.76 to Costain, but there were insufficient funds remaining under the existing finance agreement with RBS to meet this obligation. RBS refused to advance further funds unless Mr. and Mrs. Chandra were prepared to increase their personal guarantees secured against their house. Acting on the advice they say they were given by the Defendant on 20 May 2003, Mr. and Mrs. Chandra that day signed the increased personal guarantees. These were limited to the sum of £1,150,000.

In August 2003 RBS asserted that BPC was in breach of the building contract with Costain and, on 28 August 2003, demanded payment by the Claimants of £11,922,802.85. The Claimants were unable to meet that demand and so RBS put BPC into administrative receivership (Footnote: ¹). Subsequently, on 12 September 2003, RBS caused a nominee company to “step in” to the rights and obligations of BPC under the building contract and the development continued with that company acting as the employer in place of BPC. Effectively, from that point on Mr. and Mrs. Chandra had no control over the building contract.

In April 2004 the hotel was sold by the receivers for £13.5 million and, in the following month, the receivers and RBS settled Costain’s claims under the building contract by agreeing a final contract sum of £16,595,000. RBS then made a claim against Mr. and Mrs. Chandra for its consequent losses, about £4 million, and subsequently brought proceedings to repossess their home. So the Chandras lost almost everything.

The present position is that the existing claims have been set down for trial in February 2015 and so, if the Defendant’s application for summary judgment is unsuccessful, directions will have to be given as to how the new claims are to be determined: the decision, essentially, will have to be whether all the claims can be heard during the February hearing or whether there will have to be an adjournment of that hearing.

Mr. Jamie Smith, instructed by DAC Beachcroft, appeared for the Defendant. Mr. Chandra represented himself and the other Claimants.

The claim by RBS against Mr. and Mrs. Chandra to recover the amount said to be due by BPC to the bank was commenced in the Chancery Division. It came on for trial in October 2009 before Mr. Justice David Richards. On 28 January 2010 he handed down his judgment. He held that the arrangements made by the bank for the completion of the building project were lawful and effective. He rejected all of the defences advanced, save for Mrs. Chandra’s defence based on undue influence (by her husband). Accordingly, he gave judgment in favour of RBS on all issues, save for its claim against Mrs. Chandra on her additional personal guarantee. In the meantime it had been agreed that the existing claims should be stayed pending the conclusion of the action in the Chancery Division.

In November 2011 the Claimants applied to amend their particulars of claim in the existing actions. By this time Mr. and Mrs. Chandra were acting in person and Mr. Chandra was acting on behalf of BPC.

The Claim Form in the existing claim against the Defendant by BPC identified two transactions that gave rise to the complaints against the Defendant. The first was a Deed of Warranty dated 18 July 2001 between the Claimants and RBS and Costain. The second included an agreement by RBS to advance further money to the Claimants on 20 May 2003. However, the allegations in the Particulars of Claim were confined to complaints about the advice given to the Claimants by the Defendant on 20 May 2003. It was held by the Court of Appeal that the question of whether or not the new claims were already embraced in the existing proceedings had to be answered by reference to the Particulars of Claim and not the Claim Form. In the light of this conclusion, they were clearly new claims.

There were two new claims covered by the draft amendments. The first was that the Defendant should not have allowed BPC to enter into the Deed of Warranty in 2001 unless there was also a second Deed of Warranty which would have prevented RBS from following the course which it subsequently in fact followed by stepping in as employer under the building contract.

The second new claim related to the events of 2003. Its essence was that in May 2003 the Defendant should have negotiated an exit route agreement with RBS which would have had the effect of neutralising the adverse effects of the Deed of Warranty. The underlying theme of both new claims was that the step-in provisions were capable of being operated by RBS in a manner which was extremely adverse to the Claimants’ interests and that the Defendant failed to appreciate this and to advise the Claimants accordingly.

To cut a very long story short, the applications to amend the Particulars of Claim were allowed by His Honour Judge Thornton QC on 8 March 2013. The Defendant appealed. It was common ground that the new claims did not arise out of similar facts. On 5 December 2013 the Court of Appeal allowed the appeal.

The only judgment in the Court of Appeal was given by Jackson LJ. At paragraph 69 he said this:

“This leads on to a separate and important point. If a claimant applies for permission to amend and the amendment arguably adds a new claim which is statute barred, then the claimant should take steps to protect itself. The obvious step is to issue separate proceedings in respect of the new claim. This will have the advantage of stopping the limitation clock on the date of the new claim form. If permission to amend is granted, then the second action can be allowed to lapse. If permission to amend is refused, the claimant can pursue its new claim in the second action. The two actions will probably be consolidated and the question of limitation can be determined at trial.”

I will explain later in this judgment why this paragraph is relevant. But I should point out at this stage that what Jackson LJ was saying was that the separate proceedings to which he referred (as being the step by which the claimant could protect itself) must be started at the earliest possible date after the claimant becomes aware of the need to advance the new claims. That is because, as he put it, the limitation clock stops on the date of issue of the new claim form. Accordingly, it is essential that that claim form is issued at the earliest possible opportunity. If the claimant waits until the outcome of its application to amend is known, it would have allowed the limitation clock to go on ticking and thereby increase the defendant’s prospects of running a successful limitation defence.

In late 2013 the Claimants made further applications to amend their Particulars of Claim in the existing proceedings. These were dismissed by Akenhead J. The amendments for which the Claimants were seeking permission on that occasion were not in the papers for the hearing, but I am told that the Claimants were effectively seeking to reintroduce similar points to those that were the subject of the amendments considered by the Court of Appeal.

On 30 September 2014 witness statements were exchanged in the existing proceedings. It was on the basis of this material, says Mr. Chandra, that the Claimants made the new claims in November 2014.

The Claimants’ allegations in the new claims are that partners in the Defendant, Mr. Lopeman, Mr. Stockdale and Mr. Middlemass, conspired to destroy or remove documents that indicated or might indicate that they had given the Claimants negligent advice and had thereby caused the losses suffered by the Claimants. They had previously alleged that Mr. Stockdale and Mr. Middlemass conspired to destroy documents in 2009. In the new claims it is alleged that Mr. Lopeman and Mr. Stockdale conspired together between about November 2000 and May 2003 to remove certain documents from the Defendant’s files during that period. The Claimants have withdrawn an allegation that Mr. Middlemass destroyed one particular file in 2009 and instead now allege that documents from this file, and possibly others, were deliberately removed during the earlier period. These are very serious allegations.

In his reply to the Defendant’s skeleton argument for this hearing, in which Mr. Smith had commented on this apparent change of position, Mr. Chandra said that:

“The PoC in the Existing Claims, drafted by Counsel [name] who was not an expert in construction matters and therefore he did not identify that the Deed was risky, but he correctly asserted that the ‘step in’ rights were valuable to BPC, if Mr. Lopeman had advised as particularised in 34.5 [reference given]. Mr. Stockdale was Brooke North’s in-house construction expert. That said the adverse effect of the mandatory step in would have been obvious to him when Mr. Lopeman consulted him by the end of November 2000. That was why both of them embarked on the lengthy campaign of concealment including visiting or destroying these files because they were assured that their actions would most certainly bankrupt the claimants; thus preventing bringing any claim against them.”

(My emphasis)

The last two sentences of that passage effectively repeat what is alleged in the Particulars of Claim. It is the Claimants’ case that it was on reading the witness statements served on behalf of the Defendant on 30 September 2014 that they appreciated for the first time that Mr. Lopeman and Mr. Stockdale must have destroyed documents before May 2003 and that they agreed to do so “between September and November 2000” (paragraph 126 of the Particulars of Claim). This, it is said, was because at that time Mr. Lopeman became aware of his own breach of duty during that period.

Mr. Chandra correctly points out that the civil burden of proof, the balance of probabilities, applies to these claims however serious the allegations. But it is also now established that the more serious the allegation, the greater the cogency of the evidence required to prove it (albeit still on the basis that it is more likely than not that the relevant event happened). (Footnote: ²)

The missing documents are - with one exception - the ones referred to in an Advice from Mr. Richard Fernyhough QC dated 6 August 2003 prepared on instructions from Costain. He was instructed to advise on the correct construction of the Deed of Warranty. He pointed out that there was a difficulty in construing clause 9 because of an apparent conflict between clause 9.1 and clause 9.2. He noted that the wording of clause 9.1 was in mandatory form (“… the Beneficiary shall give notice to the Main Contractor”) whereas clause 9.2 suggested a contrary conclusion. There the wording was “… and in the event that a notice is served in accordance with clause 9.1…” (My emphasis in both citations).

Mr. Fernyhough went on to say that “… as a matter of pure construction of the deed (i.e. without looking at any extraneous material) it seems to me that there is a potential inconsistency within these two clauses”. He then went on to reach the conclusion that the step in provision was probably a mandatory one. However, he went on to consider the possibility of rectification. In the course of this part of his Advice he referred to the following correspondence:

Mr. Fernyhough concluded from this chain of correspondence that it was perfectly clear that the parties were ad idem in agreeing that bank should be required to step into the shoes of the employer upon Costain giving the requisite notice.

I should record that it is the Defendant’s position that the only documents that went missing were the contents of one file. It is said that this particular file was amongst a number of files that were sent to Paul Ross & Co, solicitors subsequently instructed by the Claimants, in November 2003. Mr. Chandra says that when he eventually recovered those files the documents identified by Mr. Fernyhough, bar one, were missing.

It is alleged at paragraph 23 of the Particulars of Claim that the Claimants signed an undated form of the Deed of Warranty in about April 2001, following advice from Mr. Lopeman given on 30 April 2001 (the date when the building contract was signed). It is said that Mr. Lopeman advised the Claimants that if and when BPC ran out of funds to complete the development RBS would be obliged to step in under clause 10 of the Deed of Warranty and to complete the development. This advice therefore accorded with the conclusion subsequently reached by Mr. Richard Fernyhough QC in his Advice. Mr. Chandra commented that this seemed to be too good to be true.

However, what is said by the Claimants, at paragraph 24 of the Particulars of Claim, is that Mr. Lopeman did not advise them of the implications of clause 9.1 of the Deed of Warranty, which the Claimants now say was a one-sided document that offered no benefit whatsoever to BPC: on the contrary, it is alleged that it was a manifestly disadvantageous agreement.

In this context it is relevant to note that in their Particulars of Claim in the existing proceedings the Claimants asserted positively that, if properly advised, they would have taken the risk of default under the building contract because RBS was contractually obliged to step in as employer under the building contract and would therefore have completed the development “… thereby realising the true value of the Hotel for the benefit of [BPC]” (paragraph 36.2). The claim for damages was based on the premise that it would have been better for BPC to have defaulted under the building contract in the expectation that that would lead to a termination of the contract by Costain and cause RBS to step in as employer.

The allegations of negligence against the Defendant in the Particulars of Claim identify eleven occasions on which it is said the Defendant was negligent. These are as follows:

Since the new claims were not made until November 2014 these allegations will be statute barred unless the Claimants have grounds for postponing the running of time.

The Claimants seek to do this by relying on section 32(2) of the Limitation 1980. Section 32(1)(b) of the Act provides that the running time will be postponed if “… any fact relevant to [the claimant’s] right of action has been deliberately concealed from him by the defendant”. Section 32(2) provides that:

“For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in breach of duty.”

The meaning of that subsection was authoritatively decided by the House of Lords in Cave v Robinson Jarvis & Rolf [2003] 1 AC 384. Lord Millett, with whom Lord Mackay and Lord Hobhouse agreed, said, at paragraph 25:

“In my opinion, section 32 deprives a defendant of a limitation defence in two situations: (i) where he takes active steps to conceal his own breach of duty after he has become aware of it; and (ii) where he is guilty of deliberate wrongdoing and conceals or fails to disclose it in circumstances where it is unlikely to be discovered for some time. But it does not deprive the defendant of the limitation defence where he is charged with negligence if, being unaware of his error or that he has failed to take proper care, there has been nothing for him to disclose.”

Lord Scott, with whom Lord Slynn, Lord Mackay and Lord Hobhouse agreed, put it this way, at paragraph 60:

“A claimant who proposes to invoke section 32(1)(b) in order to defeat the Limitation Defence must prove the facts necessary to bring the case within the paragraph. He can do so if he can show that some fact relevant to his right of action has been concealed from him either by a positive act of concealment or by the withholding of relevant information, but, in either case, with the intention of concealing the fact or facts in question .... Subsection (2), however, provides an alternative route. The claimant need not concentrate on the allegedly concealed facts but can instead concentrate on the commission of the breach of duty. If the claimant can show that the defendant knew he was committing a breach of duty, or intended to commit the breach of duty - I can discern no difference between the two formulations; each would constitute, in my opinion, a deliberate commission of the breach - then, if the circumstances are such that the claimant is unlikely to discover for some time that the breach of duty has been committed, the facts involved in the breach are taken to have been deliberately concealed for subsection (1)(b) purposes.”

Lord Scott expressly disagreed with a view expressed by Morritt LJ in Brocklesby v Armitage & Guest (Note) [2002] 1 WLR 598 that, since in general a person is assumed to know the legal consequences of his actions that person’s unawareness of the legal consequences of those actions would be immaterial and no defence.

On an application of this sort, in other words for summary judgment or to strike out a claim because it has no real prospects of success, the general practice in relation to disputed questions of fact is to make assumptions in favour of the party resisting the application. To that extent, therefore, what has been said on behalf of the Defendant in its witness statements would ordinarily be of limited relevance. However, in this case the position is unusual in one important respect and that is that Mr. Chandra asserts that he only became aware that documents must have been removed from the Defendant’s files prior to May 2003 when he read the witness statements served on behalf of the Defendant on 30 September 2014.

In particular, Mr. Chandra asserts that he did not appreciate that the relevant documents were already missing from the Defendant’s files prior to July 2003 until he read Mr. Siraj’s witness statement on 30 September 2014. He said, at paragraph 65 his witness statement dated 8 December 2014, that Mr. Siraj’s witness statement “… effectively proved that the said transaction file [meaning the missing documents] ... had been missing on 3 July 2003”.

At paragraphs 110-113 of the Particulars of Claim the Claimants refer specifically to paragraphs 20, 21 and 22 of Mr. Siraj’s witness statement. These follow a paragraph dealing with events between 9 and 11 June 2003, following a threat by Costain to walk off site. In paragraphs 20-22 Mr. Siraj says this:

“20.

I did not have any further input on this matter until I was asked by Stephen Lopeman on 3 July 2003 to advise Mr. Chandra of the position in relation to the ‘step-in’ rights pursuant to the main Deed of Warranty. It appears that Richard Stockdale was out of the office, so I was asked to advise Mr. Chandra in Richard’s absence.

21.

I have considered the detailed note that I made following my review of the Deed of Warranty and my subsequent telephone conversation with Mr. Chandra on 3 July 2003. It appears that Mr. Chandra advised me that his view was that the step in provisions were mandatory. He confirmed that he was now in breach of his agreement with the Bank and that he had exceeded the limit of his available finance.

22.

Although I cannot specifically recall doing so, my file note records that I considered the Deed of Warranty. It seems that I came to the conclusion that the step-in rights were exercisable at the Bank’s option, and therefore were not mandatory.”

I have to say that it is not at all clear to me how these paragraphs provide an indication that critical documents in the Defendant’s files might have been removed. Mr. Chandra goes on to say, at paragraph 101 of his witness statement:

“However after reading Mr. Siraj’s witness statement on 30 September 2014 followed [by] my forensic analysis of the witness statement by Mr. Lopeman and Mr. Stockdale, I confirm that Mr. Siraj was effectively an innocent dupe on 3 Jul 2003 when he carried out the review on step-in rights. This was so because both Mr. Lopeman and Mr. Stockdale knowingly allowed Mr. Siraj to mislead me and the Claimants on 3 July 2003.”

I have read and reread the witness statement of Mr. Lopeman and I am wholly unable to say how it provides any support for the allegations made in the new claims. At paragraph 4 this witness statement Mr. Lopeman said this, perhaps unsurprisingly:

“I have little direct recollection of the facts surrounding the allegations by the Claimants regarding the 20 May 2003 ‘Further Personal Guarantees’. The events of 20 May 2003 occurred over 11 years ago and from the documents it appears that the whole process had considerable urgency about it. I have therefore had to rely almost exclusively on the contemporaneous documents as disclosed in this action.”

Mr. Lopeman goes on to deal with the background and scope of the Defendant’s retainer, the retainer itself and then the background to and the events of 20 May 2003. He then deals with what happened following 20 May 2003 and, in the final section, he addresses the Claimants’ allegations. It will be remembered that this witness statement was made in relation to the existing claims: Mr. Lopeman could have had no knowledge of the allegations that were to be made a few weeks later in the new claims.

Mr. Lopeman accepted, at paragraph 60, that “… there do appear to be gaps in Brooke North’s papers”. He then goes on to say that he was certainly involved in the negotiation of the deeds of warranty with the project consultants and with the Deed of Warranty between BPC, Costain and RBS. He says that there are letters passing backwards and forwards between him, Irwin Mitchell (who were then acting for RBS) and Costain in 2000 and 2001 which show this to be so.

In relation to the file that the Defendant accepts cannot be located, Mr. Lopeman identified this as file L98019547 (“Funding Princess Court Hotel”). He then said this, at paragraph 16.3:

“All I can say about this file is that the time recording shows I worked on it between 10 November 1998 and 22 September 2000, with one further record of sending a letter (2 units) on 3 April 2001. As to the whereabouts of the file itself, I believe I sent it to Paul Ross & Co, who were the solicitors then acting for the Chandras personally following BPC’s receivership. I refer to my letter to Paul Ross & Co dated 20 November 2003 in which I state: ‘We enclose our files in respect of the purchase of Princess Court Hotel and the funding in respect of the purchase as requested’. This letter also coincides with a manuscript note, written on a letter dated 7 April 2009 from Mr. Hugh Middlemass (then of Brooke North LLP) to Wright Hassall solicitors, to the effect that file L98019547 had been taken out of archive in November 2003.”

Mr. Lopeman goes on in the statement to set out his recollection of the events of and around 20 May 2003 in some detail. The advice that he gave on that day was at the centre of the existing claims.

Mr. Stockdale made a witness statement dated 10 September 2014, and this too was prepared at a time when he knew nothing of the new claims. Mr. Stockdale also said that he had very little “unprompted recollection of this matter”, so that his statement was almost exclusively reliant upon the information contained within his former firm’s papers. He describes himself as a commercial litigator.

At paragraph 11 of his witness statement he says that it appeared that his first involvement in relation to this matter was on around 13 November 2000 when he was asked for advice by his partner Mr. Lopeman.

Although his witness statement did not say so expressly, it looks as if Mr. Stockdale was relying on an internal memo of the Defendant dated 30 November 2000 by which Mr. Lopeman asked Mr. Stockdale for his advice in relation to the Deed of Warranty. That memo was produced at the hearing. Since it is important, I will set out its terms in full:

“I attach details of the Special Conditions to the Building Contract, Collateral Warranties/Performance Bond and copies of correspondence relating to this matter.

You will see from the correspondence that we are having difficulty in agreeing the special conditions to the Building Contract and the Building Warranty documentation.

There is a difference of opinion between the Contractor Costains and Funders the [sic] Solicitors Irwin Mitchell.

An impasse has been reached and I have requested a meeting between the parties to try and resolve matters.

I would welcome your comments on the outstanding points.”

Mr. Stockdale’s reply, in the form of a manuscript note at the foot of the memorandum, dated 3 December 2000, was as follows:

“Stephen: I agree with Irwin Mitchell on everything. Costains are ‘holding out’ trying to minimise their exposure. I suspect they are playing a game of brinkmanship hoping BPC/the bank will give in a) for a quiet life b) because time is running and continued failure to reach agreement poses an obvious threat to the project and the banks investment. I would side firmly with the bank.”

In Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) Lewison J (as he then was) provided a very helpful summary of the approach which the court should take where an application for summary judgment is made by a defendant. At paragraph 15 he said this:

“As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:

i)

The court must consider whether the claimant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91;

ii)

A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii)

In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)

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. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact 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 a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

I propose to apply those principles.

In my view, the contents of the internal memo of the Defendant dated 30 November 2000 which I have already set out are inconsistent with any suggestion that in late November 2000 either Mr. Lopeman or Mr. Stockdale was concerned about incorrect advice that may have been given to the Claimants. On the contrary, the memo clearly indicates that Mr. Lopeman thought that an impasse had been reached between Costain and RBS which needed to be resolved. Quite understandably, he wanted to have the benefit of the opinion of Mr. Stockdale, who was seen as the firm’s specialist in construction matters. It was not suggested that this document was a forgery: indeed there has been no suggestion by the Claimants that any document has been forged or concocted. Their complaints relate to the improper removal of documents.

Whether either or both of Mr. Lopeman and Mr. Stockdale may have given inadequate advice to the Claimants is not a matter for investigation at this hearing. However, I will assume, in favour of the Claimants, that one of them did. The question on this application is whether or not there is any real prospect of showing that one or other of them had not only given negligent advice (which is to be assumed) but also knew that his advice had been negligent. Not only does the November 2000 memo not provide the slightest indication of any awareness of inadequate conduct by the firm, it seems to me to demonstrate the contrary.

Mr. Chandra submits that he should be given the opportunity to cross-examine Mr. Lopeman and Mr. Stockdale on these matters. The earliest date on which this could happen would be at the forthcoming trial in February 2015, over 14 years since the events in question. Whilst I appreciate that if either Mr. Lopeman or Mr. Stockdale had been involved in a conspiracy to remove documents from the Defendant’s files, they would be unlikely to forget it, the court must ask itself whether there is any prospect that the Claimants will be able to show that by the end of November 2000 Mr. Lopeman realised that he had given negligent advice and had taken a decision in conjunction with Mr. Stockdale to remove relevant documents from the Defendant’s files in order to conceal this.

The documents identified by Mr. Richard Fernyhough QC, being the ones that are relied on by the Claimants, are relevant to only one issue: whether or not the terms of the Deed of Warranty required RBS to step in and take over the contract in the event of termination by Costain, or whether that was a right that RBS had the option to exercise. They have nothing whatever to do with the consequences - as against BPC - of the fact that the step-in rights were mandatory.

As far as I can tell the only relevance of these documents to the Claimants’ case is that they show, or would have reminded those advising the Claimants if looked at later, that the step in rights were mandatory. All one can glean from the memo of 30 November 2000 is that the contractual arrangements between RBS and Costain were still under negotiation, although it seemed that an impasse had been reached.

If, following the Claimants’ case, Mr. Lopeman and Mr. Stockdale had decided at that point to remove from the Defendant’s files any documents that might show that the step in rights were mandatory, then it is very strange - to say the least - that they failed to remove the one document, namely the letter dated 24 November 2000 from Irwin Mitchell to the Defendant (Mr. Lopeman), that contained the clearest indication that the step in rights were or might be mandatory. Under the heading “Collateral Warranty Deed” Irwin Mitchell, acting for RBS, said this:

“The rejection of Costains’ [sic] deletions and the further amendments are a necessary and inevitable result of the step in provisions being mandatory upon the Bank rather than at their option.”

Mr. Chandra’s only response to this is to say that Mr. Lopeman and Mr. Stockdale carried out their plan incompetently with the result that the letter of 24 November 2000 was left on the file. Since the letter was written in reply to the letter of 16 November 2000, which apparently was missing (and, therefore, according to Mr. Chandra, deliberately removed), this is not a very plausible suggestion, albeit not impossible.

It will be apparent, from the summary of the contents of the documents set out in paragraph 27 above, that many of them are drafts which would require fairly close analysis (for example to note the presence or absence of the word “if”) before the reader could draw any conclusion about the intention of the parties as to whether or not the step in provisions should be mandatory. By contrast, the letter of 24 November 2000 makes Irwin Mitchell’s understanding of the position perfectly clear.

Taking all these circumstances into account, therefore, I consider that the Claimants’ allegation that Mr. Lopeman and Mr. Stockdale conspired in or about November 2000 to remove the missing documents from the Defendant’s files is, at best, fanciful speculation.

This allegation is first pleaded at paragraphs 115 and 116 of the Particulars of Claim. I will set them out in full:

“115.

Mr. Siraj was a junior solicitor with the Defendant at that time (i.e. on 3 July 2014) of his said review of step-in rights and therefore [Mr. Chandra] assert [sic] that he would not have any incentive what so ever to deliberately conceal the fact that the step-in rights of the Deed Warranty imposed mandatory obligation on RBS. That said, Mr. Siraj came to the conclusion that these step-in rights were exercisable at RBS’ option, and therefore were not mandatory, after reviewing the documents in the relevant files held by the Defendant at that time (i.e. on 3 July 2003).

116.

[Mr. Chandra] assert (based on the said conclusion of Mr. Siraj on the step-in rights) that when Mr. Siraj carried out the said review on 3 July 2003, the relevant files including the critical correspondences [passing between RBS’ solicitor Mr. Bentley (Irwin Mitchell LLP) and Costain via Mr. Lopeman (acting on behalf of [BPC]) during the negotiation between RBS and Costain to agree the mandatory step in rights/provisions in Clause 9.1 and Clause 10 of the Deed of Warranty during September 2000 to 24 November 2000], had already been missing from the Defendant’s files. [Mr. Chandra] assert that if the said files including the critical correspondences were not missing on 3 July [2003], Mr. Siraj would have come to the conclusion that the step-in rights/provisions imposed a mandatory obligation on RBS. The said critical correspondences are listed in paragraphs 116.1 to 116.3 as follows ...”

The documents then listed in paragraphs 116.1 to 116.3 were just two documents: the letter from Irwin Mitchell to Mr. Lopeman dated 25 October 2000 and the letter of 24 November 2000. I have already quoted the relevant passage from the latter. The former, under the heading “Clause 8.1/9.1”, said:

“The 21 day period can be only accepted by Costain if the Bank are obliged to step in.”

Unlike the letter of 24 November 2000, in which the statement of the position was unequivocal, the letter of 25 October 2000 is simply setting out Costain’s negotiating position at the time: it provides no indication of the final outcome.

On this basis alone, therefore, the Claimants’ allegation that Mr. Siraj must have advised as he did because certain documents had been removed from the Defendant’s files holds little water. Since it is accepted by Mr. Chandra that the letter of 24 November 2000 was “inadvertently left behind in the file”, it is self-evident that Mr. Siraj’s failure to see it could not have been the result of the removal of documents by Mr. Lopeman or Mr. Stockdale, improper or otherwise.

In his witness statement dated 8 December 2014 (at paragraphs 6.7.1 and 68) Mr. Chandra says that both the letters of 25 October and 24 November 2000, together (it seems) with a letter dated 16 November 2000, were disclosed by RBS in 2005 (Footnote: ³) in the possession proceedings. There is no plausible explanation as to why it has taken so long for Mr. Chandra to advance the allegations now made in the new claims. There was nothing in Mr. Siraj’s witness statement that could have changed the position: I am not aware that it has ever been disputed on the Defendant’s behalf that on 3 July 2003 Mr. Siraj advised Mr. Chandra that the step in rights under the Deed of Warranty were not mandatory.

However, there is another fundamental obstacle in the way of the Claimants’ allegation that Mr. Siraj must have given the advice he did because relevant documents were missing from the Defendant’s files, leading to the conclusion that the relevant documents must have been missing by July 2003, and that is that there is no evidence that Mr. Siraj looked at the Defendant’s files.

Mr. Chandra said during the course of the hearing that on 3 July 2003 he instructed Mr. Siraj to look at the correspondence relating to the Deed of Warranty. For the reasons which follow, I reject this assertion.

During the course of the hearing I asked to see the “detailed file note” to which Mr. Siraj refers at paragraph 21 of his witness statement. Unfortunately, there was no hard copy available in court but Mr. Smith’s instructing solicitors managed to arrange for a copy to be sent electronically during the course of the hearing. The contents of the note were then read to the court from an iPad. This was less than satisfactory, but Mr. Chandra did not feel able to challenge it. A hard copy was provided immediately after the hearing.

Since the role played by Mr. Siraj is central to the Claimants’ allegations, it is important to set out the contents of this note in full. It reads as follows:

“I was asked by Richard to ring Mr. Balachandra to advise him of the ‘step-in’ provisions within the Deed of Warranty between the Royal Bank of Scotland, Costain Limited and BPC Limited. I perused the Deed of Warranty and then spoke at length with Mr. Chandra. Mr. Chandra advised me that following his breach of the agreement the Royal Bank of Scotland have now entered into negotiations with Costain with a view of forcing BPC to agree a fixed price, if fundable, in order to complete the development at Princess Court in Manchester. It is Mr. Chandra’s view that the bank should not have signed the Deed of Warranty dated July 2001 as it seems to guarantee the development of the project by the bank notwithstanding BPC’s falling away. It is his view that the bank must complete the project at all costs and accordingly it is not in Costains interest to negotiate with BPC any more. Mr. Chandra indicated that it was his intention to keep himself in the negotiations by advising the bank that it would be better to deal with Mr. Chandra and BPC rather than deal directly with Costain. He has confirmed that he is in breach of his agreement with the bank in that he has exceeded the limit of the finance and that now they will only deal with this request for a further advance if they can agree the fixed price.

On initial reading of clauses 8, 9, 10 I advised him that I did not agree with his analysis but would peruse it in greater detail and advise him accordingly.

I have now perused clauses and have now spoken at some considerable length with Mr. Chandra to advise him that it is my view that the bank has an option not to continue the development, not to exercise it’s [sic] rights under the step-in provisions and to allow the main contract to be determined. Once the main contract is determined, then pursuant to the finance agreement which Mr. Chandra has signed on behalf of BPC Ltd the bank will then appoint an administrative receiver to deal with the developments. I have gone into considerable detail as to my views on clause 8.3 which allows for a negotiated settlement elapsing [sic] of the notice served on the clause 8.1 and under clause 10 which provides for an option by the bank to serve a notice that there has been a breach of the agreement, and that they are prepared to continue to complete the development. I have made it clear that it is my view that the bank does have an option and cannot therefore be ‘trapped’ by clause 9 which does not apply if there [is] clause 8.3 overriding it. In any event I said I would run this by Richard when he returns.

I have now spoken to Richard who agrees with my assessment that the bank has an option not to complete the development.

NS - Engaged - lots and lots and lots ...”

At least four things emerge from this note. First, Mr. Siraj was asked to ring Mr. Chandra by Mr. Stockdale. It looks as though Mr. Siraj then rang Mr. Chandra after he had perused the Deed of Warranty, although he does not say this in terms. Second, there were clearly two conversations between Mr. Siraj and Mr. Chandra on that day. Third, there is no reference in the attendance note to looking at any contemporaneous correspondence, either before the first conversation or before the second. Fourth, there is no indication that Mr. Stockdale knew what Mr. Siraj would say.

With regard to Mr. Chandra’s assertion that Mr. Siraj would not have advised on 3 July 2003 without having looked at the contemporaneous correspondence leading to the conclusion of the deed of Warranty, this is wholly unsupported by the attendance note. Indeed, it suggests the contrary. Had Mr. Siraj gone back to the file and looked at the correspondence, I consider that it is inconceivable that he would not have mentioned it in such a detailed note. Apart from anything else, he would probably have done so if only to justify the length of time spent - which was clearly fairly substantial.

In my view, the irresistible inference to be drawn from this document is that Mr. Siraj did not go back to the contemporaneous correspondence before advising Mr. Chandra. Thus the essential link in Mr. Chandra’s chain of reasoning, leading to his conclusion that the documents must have been removed from the Defendant’s files prior to July 2003, is missing.

In my judgment it is quite clear that Mr. Siraj advised Mr. Chandra on the meaning and effects of the Deed of Warranty on the basis of the deed itself and nothing else. Since, by describing Mr. Siraj as “an innocent dupe” Mr. Chandra is not accusing him of any part in a conspiracy to mislead the Claimants (at paragraph 148 of the Particulars of Claim Mr. Siraj’s belief is described as “honest but false”), the Claimants do not assert that his advice was not genuinely given (and, on the basis of the Particulars of Claim, it would not be open to them to do so). Further, there is nothing in the note to suggest that Mr. Siraj was in some way primed by Mr. Stockdale as to what to say.

I accept that it is not impossible, on the basis of the attendance note alone, to exclude the possibility that when Mr. Stockdale asked Mr. Siraj to ring Mr. Chandra he also briefed him on the party line and told him what he should say. But this is not the way the allegation has been put.

The allegation of the removal of documents is then raised again in the context of the advice given by Mr. Lopeman to the Claimants on 20 May 2003. Paragraph 127 of the Particulars of Claim is as follows:

“On 20 May 2003 Mr. Lopeman had more than sufficient time in between 11:48 am and 3:00 pm to consider the said relevant files (as particularised in paragraph 120.2 above) including the critical correspondences (as particularised in paragraphs 116.1 to 116.3 above) in respect of the mandatory step-in provisions under Clause 9.1 and Clause 10 of the Deed of Warranty prior to advising the Claimants. It would have only taken less than 30 minutes for Mr. Lopeman to locate the files and read through the said documents (as particularised in paragraphs 116.1 to 116.3 above) which were already familiar to Mr. Lopeman, as from 24 November 2000.”

Paragraph 128 of the Particulars of Claim set out the next step in the argument as follows:

“If the said relevant files (as particularised in paragraph 120.2 above) including the critical correspondences (as particularised paragraphs 116.1 to 116.3 above) in respect of the mandatory step-in rights/provisions under Clause 9.1 and Clause 10 of the Deed of Warranty were not missing [from] the Defendant files on 20 May 2003, Mr. Lopeman would have located the relevant files containing the critical correspondences on 20 May 2003 and read the documents prior to advising the Claimants. Nowhere in his witness statement dated 25 September 2014, Mr. Lopeman indicated that he had searched for the relevant files (as particularised in paragraph 120.2 above) containing critical correspondences (as particularised in paragraphs 116.1 to 116.3 above) prior to advising the Claimants on 20 May 2003.”

The Particulars of Claim then go on to assert that if the “critical correspondences” were not missing Mr. Lopeman would have read them and would then have realised that he had 21 days to consider the Claimants’ instructions to him and to advise that RBS should be asked to grant time to consider the Finance Agreements and other documents. This failure to do so, it is alleged at paragraph 130:

“... effectively proved that on 20 May 2003 that the relevant files (as particularised in paragraph 120.2 above) containing the critical correspondences (as particularised in paragraphs 116.1 to 116.3 above) in respect of the mandatory step-in provisions under Clause 9.1 and Clause 10 of the Deed of Warranty had already been missing from the Defendant’s files on or prior to 20 May 2003. It should be noted that [Mr. Chandra] could not have come to the said conclusion until he had read the witness statements by Mr. Lopeman and Mr. Siraj.”

Thus the same point is being made in relation to Mr. Lopeman’s failure to give the advice alleged as was made in the case of Mr. Siraj, namely that the failure to give appropriate advice shows that the documents must have been missing from the Defendant’s files at the time when the advice was given. It is not clear to me how the fact that there is no reference in Mr. Lopeman’s witness statement that he had searched for the relevant files on 20 May 2003 supports the allegation that he looked for them but they were not there. In my judgment it is far more likely in the circumstances that he just did not look for the documents. This is for two reasons. First, time was very short and the Claimants were seeking advice as a matter of urgency. Second, the advice being sought by the Claimants was what they should do given the terms of the various agreements, in particular the building contract and the Deed of Warranty.

It would be unusual in those circumstances for a solicitor to consider that it might be necessary to go back and look at the correspondence recording the negotiations leading up to the making of the relevant agreements. This is not to say that a solicitor might not have done so, but to assert that the advice given (or not given) by Mr. Lopeman shows, as a matter of probability, that the relevant documents must have been missing from the Defendant’s files when he gave the advice seems to me to be far-fetched. There is, as Mr. Chandra has rightly pointed out, no evidence that Mr. Lopeman did look for the relevant documents on 23 May 2003 or thereafter.

Mr. Chandra also relied on a letter dated 23 September 2004 written by Mr. Lopeman to Paul Ross & Co, in which he said:

“The writer, Stephen Lopeman, had spoken with his Partner Richard Stockdale who was involved after the documentation was executed. Mr. Stockdale recalls in the later stages of his instructions when Mr. Chandra was involved in greater and greater conflict with the bank that he suggested to him that the step in right [sic] were mandatory. Mr. Stockdale recollects that Mr. Chandra advised him that he was speaking to a different firm of solicitors and was obtaining some advice from them. Mr. Chandra told Mr. Stockdale that he had taken the view that step in rights were mandatory. We have handed all our documentation over to the liquidator’s solicitors so we have nothing to refer to but Mr. Stockdale’s recollection is that he had a look again at the documentation in light of Mr. Chandra’s suggestions but remained of the view that it was not mandatory and the step in rights were available at the option the bank. Mr. Stockdale told Mr. Chandra this on more than one occasion.”

(My emphasis)

Mr. Chandra submits that the word documentation is being used in the same sense on both occasions where it appears in the penultimate sentence - meaning all the correspondence. Mr. Smith submits that the meaning is intended to be the same in the first and third places where the word appears in the passage - in other words, referring to the contractual documentation, such as the Deed of Warranty and the building contract. As a matter of language, I prefer the view of Mr. Smith, but either way I do not consider that this letter can be treated as if it had been drafted with the care that goes into a statute. In my view it is probably loose use of language.

At paragraph 5.1 of Mr. Chandra’s reply to the Defendant’s skeleton argument he said this:

“I accept that the fact of the missing file does not give rise to an inference of deliberate tampering by a solicitor (still less by two in collusion). I also accept that files do from time to time go missing.”

Then he continues:

“The fact that Mr. Lopeman and Mr. Stockdale did not obtain a copy of the file ... from RBS’ solicitor on or prior to or after 20 May 2003 gives rise to the conclusion that both of them had knowingly committed breaches of duty, amounting to ‘Deliberate Commission of Breach of Duty’ (as clarified by the decision of the House of Lords ...”

I have to say that I regard this as another allegation with absolutely no material to support it.

The point is developed at paragraph 132 of the Particulars of Claim, where it is alleged that Mr. Lopeman knew on 20 May 2003 that RBS’s solicitors, Irwin Mitchell and then Addleshaw Goddard, had files containing the relevant documents and so he was therefore obliged to obtain copies of the relevant documents from them and to seek further time on the Claimants’ behalf from RBS whilst doing so. This in my view is a weak allegation, but not one that can be dismissed as hopeless. However, in the next sentence it is simply asserted that Mr. Lopeman knew that he was committing a breach of duty on 20 May 2003 and that this amounted to a deliberate commission of a breach of duty within the meaning of section 32(2) of the Act. I can find no basis for this allegation.

It is then said, at paragraph 134 of the Particulars of Claim, that Mr. Lopeman’s motive for committing this deliberate breach of duty was to conceal the fact that he on behalf of BPC had agreed (during September 2000 to 24 November 2000) to the mandatory step-in rights with RBS and Costain and allowed BPC to proceed with the development without any protection (in the form of the “BPC Guarantee”). I have already concluded that there is no material to support the assertion that either Mr. Lopeman or Mr. Stockdale were or might have been aware, by the end of November 2000, that either of them had or might have committed a breach of duty towards the Claimants.

At paragraph 153 of the Particulars of Claim it is alleged that:

“As particularised in paragraph 142.3 above Mr. Stockdale knew that the step in rights were mandatory and therefore he mislead [sic] [Mr. Chandra] by his said advice and such advice by Mr. Stockdale was a breach of duty by Mr. Stockdale on 21 July 2003 (or very shortly thereafter). [Mr. Chandra] became aware of the said breach of duty by Mr. Stockdale on 21 July 2003 (or very shortly thereafter) prior to the primary limitation period expiring on 28 August 2009.”

Paragraph 142.3 the Particulars of Claim said this:

“The statement by Mr. Lopeman in paragraph 40 of his witness statement effectively confirms that Mr. Stockdale had in-depth knowledge of the mandatory step-in rights and that was why Mr. Lopeman asked him on 3 July 2003 to advice [sic] [Mr. Chandra][about]‘the step in rights re the Bank’.”

All that Mr. Lopeman said in paragraph 40 of his witness statement was this:

“I do not believe that I played any further substantive part in this matter following the meeting I attended with Mr. Chandra and RBS on 25 June 2003. I do note that I sent an e-mail to Richard Stockdale on 3 July 2003asking Richard to ring Mr. Chandra‘to explain the step in rights re the Bank’. To my mind this demonstrates that I did not feel comfortable giving that explanation myself and instead I refer the question to Richard, he having expertise in construction matters.”

In my view that comes nowhere near to being evidence that Mr. Stockdale had a correct understanding of the meaning and effect of the step in provisions in the Deed of Warranty.

As I have already indicated, Mr. Chandra asserts that it was not until he saw the Defendant’s witness statements that he was able to make the new claims. I reject this.

Mr. Chandra said also that the Claimants were merely complying with Jackson LJ’s observation that a claimant should issue a fresh claim form as a precaution when making applications to make new claims in additional proceedings if there was a limitation point. For the reasons that I have already given at paragraph 21 above, there is nothing in this submission.

As I have already said, the allegations of professional negligence made by the Claimants in this action are many years out of time and so this claim must fail unless the Claimants can show that the date from which time ordinarily starts to run under the Limitation Act 1980 has been postponed.

It was accepted on behalf of the Defendant that, if the Claimants can show this, the new claims would have been brought within the relevant period as extended. The only issue, therefore, is whether the Claimants’ allegations of deliberate concealment in the new claims have merits that are better than fanciful.

In my view, there is not a single allegation made by the Claimants in the Particulars of Claim in relation to deliberate concealment that can be categorised as anything but wishful thinking. They do not establish anything approaching a case with a realistic prospect of success, for the reasons that I have given.

I am particularly conscious of the fact that when reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial, as the Court of Appeal warned in Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550. That was a case where nearly all the claims that had been struck out by the judge, and which were restored on appeal, succeeded at a retrial before a different judge.

Mr. Chandra has not pointed to any such evidence and I find it very hard to see what there could be. What Mr. Chandra is really asking for is the opportunity to cross-examine Mr. Lopeman, Mr. Stockdale and Mr. Siraj. In the light of the contemporaneous documents to which I have referred I am simply unable to see how, some 14 or 15 years after the events in question, such cross examination, however conducted, is likely to make any difference.

When considering whether, on the balance of probability, two solicitors conspired together to remove the traces of the knowledge that was available to them, cogent evidence will be required. I can see no prospect whatever of there being such evidence in this case. The new claims are in my view hopeless: they must be stopped in their tracks, and stopped now.

Accordingly, there must be summary judgment for the Defendant.