Jogo Associates Ltd & Ors v Internacionale Retail Ltd [2011] EWCA Civ 384

[2011] EWCA Civ 384Case No A3/2010/2083A3/2010/2083(B), A3/2010/2083 (C)
IN THE COURT OF APPEAL (CIVIL DIVISION)
Venue ON APPEAL FROM CHANCERY COURT AT LEEDS
HIS HONOUR JUDGE LANGAN QC
9LS40911
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 07/04/2011
Before
LORD JUSTICE THOMASLORD JUSTICE LLOYDLORD JUSTICE RIMER
Between
(1) Jogo Associates LimitedClaimants/(2) The Pinstripe Clothing Company LimitedRespondents(3) The Red Orange Clothing Company LimitedRespondentInternacionale Retail LimitedDefendant/
Ms H Stonefrost (instructed by Muckle LLP) for AppellantMr P Arden QC (instructed by Billy Hughes Solicitors) for RespondentHearing Hearing date : 1 March 2011
Judgment
[1]In this appeal the appellant (Internacionale) appeals against the decision of HHJ Langan QC sitting in the Chancery Court at Leeds granting summary judgment in a claim made against it. The claim arose out of its purchase of the business of Jet Star Retail Limited (“Jet Star”), a discount fashion retailer of women’s clothing, from the administrator of Jet Star. That claim was made by the Respondents to the appeal, three connected companies - Jogo Associates Ltd, The Pinstripe Clothing Company and Red Orange Clothing Ltd; I shall refer to these as Jogo. Jogo alleged that it had supplied Jet Star with clothing and was relying on a retention of title clause in respect of goods delivered to Jet Star for which it had not been paid.[2]Internacionale’s primary defence to the claim was that the retention of title clause had not been agreed at the time of the purchases, but only at or about the time when Jet Star went into administration. Jogo denied this. The judge concluded that there was no solid evidence to disbelieve Jogo. On appeal, Internacionale did not dispute the decision of the judge on the evidence before him, but contended that this court should admit fresh evidence which would show that summary judgment should not have been granted.[3]It is necessary to explain the background in more detail and the way in which the evidence emerged, as the most important evidence was served a few days before the hearing of the appeal.

The background

[4]Jet Star had traded as Mark One. The business of Mark One had a long history. It was initially founded by Mr Mark Brafman, through a company called Mark One Ltd; this company went into administration in 1996. The business was then acquired by others and subsequently in 2004 purchased by the Baugur Group, an Icelandic Company that made many such acquisitions. It was then acquired by Northworld Limited, a vehicle for Hilco UK Ltd, retail restructuring specialists, a company to which Mr Robert Schneiderman was a consultant.[5]Jet Star was incorporated on 8 May 2008 to acquire a substantial part of the Mark One business from Northworld which was also in administration. That purchase was completed on 27 May 2008 with some of the purchase price being paid to Northworld and the balance left outstanding with Northworld which was given a qualifying floating charge over the assets of Jet Star; the rest of the Mark One business was left with the administrators who had been appointed for Northworld, two partners of Deloittes.[6]At the time of the acquisition the shareholders of Jet Star were Mr Mark Brafman and Mr Bulbinder Singh who owned 50% each. At the time of the acquisition, both men were disqualified from acting as directors; Mr Brafman had been disqualified in 2001 and Mr Bulbinder Singh in 2003. The directors of Jet Star were Mr Brafman’s wife, Michelle Brafman, and Ms Dolly Deacock, a person with long experience of the retail trade and who had been closely involved in the business of Mark One for many years, latterly as a buyer and merchandising director. The evidence indicated that Mr Brafman played a significant role in the running of Jet Star.[7]Between July and November 2008, Jogo sold goods to Jet Star.

The administration of Jet Star

[8]On 14 October 2008, Mrs Brafman and Ms Deacock resigned as directors of Jet Star; there had apparently been a falling out between Mr Bulbinder Singh and Mr Brafman and Mr Brafman’s shares were transferred to Mr Singh. On 27 October 2008, Jogo issued a winding up petition against Jet Star. Jet Star went into administration on 19 November 2008 when Northworld, as a holder of the qualifying floating charge, appointed administrators – Mr Neil Bennett and Mr Michael Healey of Leonard Curtis, licensed insolvency practitioners in London.[9]While the administrators of Jet Star sought to sell the business, Jet Star continued to trade. The business was sold on 25 November 2008 to Internacionale for a price of £1m to include stock which was valued in the agreement at £750,000. Internacionale took over most of the shops and continued the business.

The claim made by Jogo

[10]On 9 July 2009, Jogo issued a claim against Internacionale claiming it had supplied stock to Jet Star on terms and conditions, which included a retention of title provision, set out in three letters dated 3 June 2008 which were signed by Ms Deacock. Each contained a paragraph which stated:
“As per the enclosed terms and conditions we reserve title to all goods which are supplied by our company to Jet Star Retail Ltd under all present and future contracts. Title to our goods will only pass to Jet Star Retail once our company has received settlement in the form of cleared funds for those goods which form part of the said contracts.”
Jogo contended that Internacionale had wrongly converted the stock supplied on those terms as Jet Star had not paid Jogo; the value of the stock was said to be about £1.1m.[11]In its defence served on 21 August 2009, Internacionale put forward as their defence the position advanced by the administrators who had rejected the retention of title claim based on the letters which bore the date of 3 June 2008. Internacionale asserted that it believed that the administrators suspected that the letters had not been signed on the date on the face of the letters but rather at the time or after the commencement of Jet Star’s administration. The defence referred to other claims brought against the administrators by suppliers in Birmingham and in London relying on nearly identical letters.

The application for summary judgment

[12]On 22 September 2009, Jogo made an application for summary judgment on the claim. i) It initially served a witness statement from Mr Mahmud Kamani, a director of Jogo who stated that all the goods were purchased under their standard conditions and the express agreement in the letters dated 3 June 2008. ii) In a further witness statement dated 13 November 2009, Mr Kamani said that at a meeting on 3 June 2008, he told Ms Deacock that he could not get any credit trade insurance on Jet Star and was reticent to lose money again as he had done with Northworld. He had insisted on the letters being signed. He had been alerted to the need for this by Mr Brafman who had told him that Jogo’s position should be protected by obtaining signed terms and conditions. iii) Jogo also served a statement made by Ms Deacock on 31 March 2009 in which she said she had dealt with Jogo for 20 years; she described the method of purchase and the meeting of 3 June 2008 when she had gone to Manchester; she had met Mr Kamani and at his insistence had signed the letters.[13]Internacionale applied for a stay pending the resolution of a claim in Birmingham by another supplier against the administrators where the supplier was relying on a similar letter and where the administrator was contesting its validity. The application for an adjournment was refused on 5 November 2009. Internacionale therefore served in December 2009, in opposition to the summary judgment application, a statement by Mr Milton of Internacionale and a statement by Mr Bennett, one of the administrators, dated 16 December 2009. Mr Milton’s statement referred to the proceedings in Birmingham; Mr Bennett’s statement referred to the fact that Jogo had not relied on the letters of 3 June 2008 in their letter of claim dated 14 November 2008 and there were no copies of the letters in the files of Jet Star. He exhibited a statement he had made in the Birmingham proceedings on 2 June 2009 in which he set out a chronology of his dealings with Ms Deacock. I refer to this at paragraph 37 below.[14]The proceedings in Birmingham were brought by Mr Bulbinder Singh trading as Isher Fashions UK, relying on Ms Deacock’s letter of 9 June 2008 (whose terms included provisions similar in purported effect to those of 3 June 2008 referred to in paragraph 10 above); the administrators defended the proceedings on the basis that they did not admit that there was a retention of title clause; the administrators made no admission about the letter of 9 June 2008 and did not allege fraud. On 22 January 2010, HHJ Simon Brown determined preliminary issues deciding that the retention of title clause was incorporated. By the time of that hearing the administrators had not developed the evidence beyond that set out in Mr Bennett’s statement of 3 June 2009; no positive case was advanced about the letters.[15]At the summary judgment hearing in these proceedings on 24 March 2010, HHJ Langan QC held that Internacionale had no real prospect of defending this point primarily on the following findings of fact: (i) Internacionale had a case of no more than suspicions – it had relied on the hearsay of Mr Brafman, there were no copies on Jet Star’s files, a high proportion of the goods were delivered close to the administration, and the fact that Jogo launched winding up proceedings first and continued to deliver stock. The judge referred to the proceedings in Birmingham. He concluded that there was “no solid reasons for disbelieving” what Jogo say.[16]Summary judgment was granted for damages to be assessed; no interim payment was ordered. Directions for the assessment of damages were agreed on 3 June 2010.

The application for permission to appeal: the evidence of Mr Brafman

[17]On 25 August 2010 Internacionale applied for permission to appeal on the basis of a witness statement from Ms Chesser which stated that Internacionale had not been able to obtain, prior to the summary judgment hearing, a witness statement from Mr Brafman as he was not prepared to co-operate. After the judgment they had approached Mr Brafman; it had taken some time to persuade him to sign his statement.[18]In his witness statement dated 13 August 2010 Mr Brafman described his position in Jet Star and his working relationship with Ms Deacock. He said he was with Ms Deacock in Manchester on 3 June 2008; he attended a meeting at which Ms Deacock and Mr Kamani were present; he did not believe that Ms Deacock met Mr Kamani separately. He did not believe that the letters could have been signed by her on that date as he would have known of them because of his close working relationship with Ms Deacock. He denied the assertion made by Mr Kamani that he had advised him to procure the letters. He went on to say that he had had lunch with Ms Deacock in early December 2009; he told her he did not know about the letters. His statement continued:
“I asked Dolly whether she really signed the letters on the date that they are dated. Dolly answered stating that she signed them on the date that they were signed and did not say anything further. She half smiled when she said this statement, which adds to my belief that she is being untruthful.”
He went on to say he warned her about the trouble she would get into and told her she should withdraw the letters. His statement then referred to other suppliers who had letters to similar effect; he had not been told about them.[19]On 22 October 2010, permission to appeal was granted by Longmore LJ who adjourned to the court hearing the appeal the decision as to whether to admit the fresh evidence.[20]The response of Jogo was to serve a third witness statement from Mr Kamani and a statement from Mr Hughes, Jogo’s solicitor. Mr Hughes’ statement annexed two statements made by Mr Brafman in early 2009 that were at complete variance with his statement made in August 2010. I will refer at paragraph 30 to both of those statements; Mr Hughes also gave an account of his conversations with Mr Brafman.[21]Ms Chesser and Mr Irvine, of Internacionale’s solicitors then served further witness statements made on 16 December 2010 and 7 January 2011 setting out their conversations with Mr Brafman about his conflicting statements. On 14 February 2011, Internacionale filed a further application notice to adduce fresh evidence – those statements of Ms Chesser and Mr Irvine to which I have just referred and a third witness statement of Ms Chesser dated 10 February 2011. This last was the more important as it exhibited a transcript of Ms Deacock’s interview on 15 May 2009 under s.236 of the Insolvency Act 1986 in the presence of Mr Bennett, one of administrators, and solicitors representing the administrators and Ms Deacock. I will refer to this at paragraphs 33.ii) and 37.xii). Ms Chesser’s statement explained that she had been told on 12 January 2011 by Sprecher Grier Halberstam LLP (SGH), the administrators’ solicitors, that they would be serving the transcript in proceedings in a claim by other suppliers, Peach Melba, due to be heard in the Chancery Division on 21 February 2011; the administrators’ evidence in the Peach Melba claim (including the transcripts) was sent to her on 27 January 2011.[22]On 15 February 2011, Mr Hughes served a further statement in response to Ms Chesser’s statement made on 16 December 2010 and Mr Irvine’s made on 7 January 2011 in which he set out a further account about the taking of the statements of Mr Brafman and Mr Brafman’s comments made to him in a telephone conversation on 3 February 2011 on what Ms Chesser and Mr Irvine had said in their statements.[23]On 24 February 2011, a few days before the hearing, Internacionale made an application to admit yet more evidence - a fourth witness statement of Ms Chesser dated 23 February 2011 and a statement of Mr Bennett dated 23 February 2011. i) Ms Chesser’s statement explained that she had been told by the administrators’ solicitors on 16 February 2011 that the litigation between a supplier called Peach Melba Designs Ltd and the administrators (which was due to be tried on 21 February 2011) had been settled. The claim involved a retention of title letter similar to the letter of 3 June 2008. Mr Bennett had prepared a statement that had not been finalised for that action and it might be relevant to the claim by Jogo. Mr Bennett had consented to supplying a statement which was provided on 23 February 2011. ii) Mr Bennett’s statement of 23 February 2011 was not the draft statement for the litigation involving Peach Melba Designs but a witness statement in this action. He explained that his statement set out the facts and matters that were in the statement he was preparing for the Peach Melba claim. The content of this statement became central to the issue at the hearing of the appeal; it will be necessary to refer to it in more detail at paragraph 38 below.

The applicable principle

[24]It was common ground that, although there were several decisions of this court setting out the applicable principles for the admission of fresh evidence, it was sufficient to refer to the judgment of Arden LJ in Aylwen v Taylor Johnson Garrett [2001] EWCA Civ 1171 where, after referring to Ladd v Marshall and Langdale v Danby [1982] 1 WLR 1134, she concluded: .. the practice of the Court of Appeal as recorded in the annual practice is to decline to admit fresh evidence even on an appeal against summary judgment unless the special grounds in Ladd v Marshall apply. It seems to me that a similar approach should apply to the reception of fresh evidence on applications under CPR 3.4 and 24.1 as now apply to other appeals (see Hertfordshire Investment v Bubb), respecting of course the type of difference in application of the principles to which Lord Bridge referred in Langdale v Danby. Moreover, I would accept that the same should apply to amendments to statements of case adduced for the first time in the Court of Appeal to avert the unfavourable outcome of an application to dismiss a claim under CPR 3.4 or CPR 24.2”[25]The three conditions set out in Ladd v Marshall were:(i) the evidence could not have been obtained with reasonable diligence for use at the trial;(ii) the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive;(iii) the evidence must be apparently credible, although it need not be incontrovertible.[26]In the circumstances of this case it was clear that the second and third questions should be considered together, as the essential question was credibility. I therefore turn to consider the fresh evidence -(1) that from Mr Brafman and(2) that from Mr Bennett in respect of Ms Deacock.

The fresh evidence of Mr Brafman

[27]As I have set out at paragraph 17 above, Miss Chesser stated that it was not possible for Internacionale to obtain Mr Brafman’s evidence prior to the summary judgment hearing; he would not cooperate with or assist Internacionale; it was relying on the efforts of the administrator.[28]However, in my view, it was clear to Internacionale and its solicitors by late January 2011 that the administrator could not get Mr Brafman to sign a statement; no effort was made by Internacionale or its solicitors over the ensuing month to contact him or to try and obtain a statement.[29]It seems clear that it was only in April 2010 that Mr Brafman was contacted by Mr Nigel Fisher of Internacionale; he received the first letter from their solicitors on 12 April 2010; he was then prepared to assist – the delay was in getting him to sign his statement. There was no reason why this approach could not have been made before the hearing.[30]Assuming that Internacionale acted with reasonable diligence to obtain his evidence, his evidence is simply not credible: i) I have set out at paragraph 18 his account of his visit to Manchester on 3 June 2008. ii) He had, however, signed in February and March 2009 two witness statements saying precisely the opposite. These statements had not been served by Jogo on the advice of counsel as it was considered there was sufficient evidence without them. The statements were made in proceedings in the Companies Court, supporting Jogo’s claims in relation to the letters and the retention of title clause. iii) In the first of the statements which was dated 25 February 2009, he gave an account of the way in which business was conducted between the parties and of the main meeting on 3 June 2008 at which he was not present and of a second meeting at which he was: “I understand that the main meeting on Tuesday 3 June 2008 took place between Mrs Deacock and Mahmud Kamani from [Jogo]. Whilst the main meeting was taking place I believe that I was located at a city centre hotel dealing with Jet Star’s property matters. I believe that I attended [Jogo] offices after the main meeting had been concluded so as to show my face and gain a rough idea of the buying that had been conducted that day. I was subsequently informed by Mrs Deacock that at the main meeting she signed letters for each company containing terms and conditions and in particular an “all monies” retention of title clause as Mahmud Kamani had indicated that he was unable to obtain any credit trade insurance on Jet Star. I understand that Mrs Deacock signed each of the 3 letters in her capacity as a Director of the Company on 3 June 2008. It was my understanding and I agreed that all of Jet Star’s dealings with [Jogo] were in accordance with the terms and conditions set out in the letters dated 3 June 2008 …” iv) In his statement of 4 March 2009, he gave a detailed account of a meeting in December 2008 with Mr Schneiderman of Hilco to whom I have referred at paragraph 4; Mr Schneiderman had mentioned that he was dealing with a number of retention of title claims, including those by Jogo. He said he was subsequently telephoned by Mr Schneiderman about the retention of title claims, particularly those by Jogo. Mr Brafman told Mr Schneiderman that he was aware of the existence of the letters signed by Ms Deacock; Mr Schneiderman asked if he would contact her; Mr Brafman was under the impression that Mr Schneiderman did not want him or Ms Deacock to help Jogo. He met her a few days later; she was uncomfortable and upset at the pressure she was under from Mr Schneiderman. Mr Schneiderman telephoned again and asked him to put pressure on her. v) Mr Hughes had contacted Mr Brafman after the service of his August 2010 statement. He had then sent him the statements he had made in February and March 2009. In the result, Mr Brafman sent an e-mail to the solicitors of both parties on 5 December 2010, stating that he wanted to retract all his witness statements.[31]Points could and were made about the way in which Mr Brafman’s statements had been drafted so as to avoid stating when Mr Brafman had become aware of the letters; a faint attempt was made to try and reconcile them. However the statements are plainly inconsistent and irreconcilable. A judge considering his evidence would not be able to attach any weight to his evidence; he is not a credible witness. The statement made in August 2010 would in the circumstances have had no influence on the outcome of the summary judgment application. His evidence was therefore not admissible as fresh evidence.[32]There were only two statements before the court from Ms Deacock, that dated 31 March 2009 referred to in paragraph 12.iii) and one of the same date in materially the same terms to which I refer at paragraph 37.x). It was contended, however, that the transcript of her interview and the evidence from Mr Bennett in his statement of 23 February 2011 cast sufficient doubt on her account that, if it had been before the judge, he would not have granted summary judgment.

Due diligence

[33]The first question is whether that evidence could have been obtained with reasonable diligence: i) In his statement in the Birmingham proceedings, Mr Bennett had claimed privilege for the interview with Ms Deacock on 15 May 2009. ii) Ms Chesser stated that it was only on 12 January 2011 she found out that the “Administrators would now be in a position to release Dolly Deacock’s” transcript, as it would be in evidence at a trial between the administrators and Peach Melba. It was provided on 27 January 2011. iii) The further statement of Mr Bennett was provided in the circumstances I have described at paragraph 23.[34]It is clear that Internacionale were relying on the administrators to provide as much evidence as is possible; they had not, in my view, exhibited any want of due diligence. The administrators were simply not prepared to do more at any time than suited their interests.

The significance and credibility of the new evidence

[35]I therefore turn to consider whether the fresh evidence would have influenced the outcome. In my view, although points could be and were made about the way in which Ms Deacock’s statement of 31 March 2009 was expressed and about her phraseology in the few lines of the interview that were relevant, these are of no materiality in impugning her statement of 31 March 2009 in which she stated the letters were signed on 3 June 2008. All the interview does is to provide a small modicum of support to Mr Brafman’s presence at the meeting on 3 June 2008, but, as will be seen, it is no more than that.[36]The only evidence that casts any real doubt on the statement of Ms Deacock that the letters were signed on 3 June 2008 is Mr Bennett’s account of what she told him at a meeting on 26 February 2009 in relation to the signing of the letters. This was an account which Mr Bennett gave, despite the many other statements he has made, for the first time in his statement of 23 February 2011. The issue is whether given the way that Mr Bennett conducted himself and the way the statement emerged, it can be regarded as sufficiently credible and reliable to raise a real doubt about the truth of Ms Deacock’s statement.[37]To understand Mr Bennett’s conduct and the context of his statement of 23 February 2011, it is necessary to set out an account of Mr Bennett’s prior evidence of his dealings with Ms Deacock in evidence put before(i) Judge Langan QC and this court in these proceedings,(ii) in the Birmingham proceedings on 3 June 2009 and(iii) his report to the Companies Court made on 3 April 2009 in support of an application to interview Ms Deacock under s.236. i) His solicitors, SGH, first wrote on 21 January 2009 to request an interview. ii) Her then solicitors, ABV solicitors, responded to say that they had been instructed. On 5 February 2009, SGH wrote to ABV to say that they understood that Ms Deacock had requested a comfort letter and they were prepared to provide a comfort letter in the following terms:
“Subject to Ms Deacock undertaking the matters set out in the schedule below, and in return for the same, the Administrators hereby confirm that they will not commence or issue proceedings against Dolly Deacock under the antecedent transaction provisions of the Insolvency Act 1986 or otherwise insofar as concerns any cause of action that may be in existence or in contemplation concerning the execution by Ms Deacock of the Letters (as defined above). The Schedule – Matters to be undertaken by Dolly Deacock 1. Attendance at an interview, such interview to be taped or transcribed, on Wednesday 11 February 2009 at [insert time] at the Administrators’ offices or such other venue as may be agreed between the parties. 2. Within 48 hours of the said interview to sign a witness statement, such witness statement to be used (for the avoidance of doubt) by the Administrators in dealing with all and any retention of title claims made in the administration of Jet Star Retail Limited t/a Mark One, such witness statement to include full particulars of:- 2.1 the circumstances in which the Letters were signed, and were caused to be signed, to include the date upon which they were signed, by whom Ms Deacock was asked to sign the same, and what consideration (if any) Ms Deacock received in return; 2.2 confirmation that the Letters were not signed on the dates maintained by the ROT creditors; 2.3 an explanation of the reasons why Ms Deacock signed the letters; 2.4 a full explanation concerning the operation and functionality of the EPOS stock system both immediately prior and as at the date of appointment of Administrators; 2.5 confirmation specifically that the office-holders were unable to print out or otherwise obtain electronically a list of the stock on a store by store basis, or as allocated between suppliers; 3. If required to attend at any trial in respect of any ROT claims, in order to give oral evidence on behalf of the Administrators confirming the contents of the witness statement to be given pursuant to paragraph 2 above.”
The Schedule – Matters to be undertaken by Dolly Deacock 2.1 the circumstances in which the Letters were signed, and were caused to be signed, to include the date upon which they were signed, by whom Ms Deacock was asked to sign the same, and what consideration (if any) Ms Deacock received in return; 2.2 confirmation that the Letters were not signed on the dates maintained by the ROT creditors; 2.3 an explanation of the reasons why Ms Deacock signed the letters; 2.4 a full explanation concerning the operation and functionality of the EPOS stock system both immediately prior and as at the date of appointment of Administrators; 2.5 confirmation specifically that the office-holders were unable to print out or otherwise obtain electronically a list of the stock on a store by store basis, or as allocated between suppliers; iii) On 9 February 2009 ABV replied stating that they hoped to be able to confirm an appointment for the afternoon of 11 February 2009. On either the day prior to the appointment or on the morning of the appointment, her solicitors informed SGH that she would not attend for the appointment. An appointment was made for 26 February 2009 with Ms Deacock. iv) On 26 February 2009, Collyer Bristow, who had been appointed by Ms Deacock as new solicitors, faxed to SGH a letter stating that she was taking legal advice and would not attend that day. They would be in touch in 7 days. They asked for a copy of the comfort letter so that they could advise her. SGH replied that day enclosing a copy of the comfort letter and stating that they looked forward to hearing as soon as practicable. v) What Mr Bennett originally stated then happened on 26 February 2009 was set out in his report to the court on 3 April 2009: “49. In fact during the course of 26 February 2009, I did in fact meet with Ms Deacock around the corner from my offices at the Cumberland Hotel, Great Cumberland Place, London W1H 7DL. The purpose of this meeting was not however to afford me an opportunity to interview Ms Deacock concerning the company’s affairs, but rather she, with the assistance of Clyde Lester of Lester Associates (another supplier), who was present with her, attempted to broker a settlement with me in order to allow her to give evidence and information to the Joint Administrators. I elected to meet with her, and to explore whether a settlement was possible, with a view to trying to avoid the costs of a formal examination before the Court notwithstanding that Ms Deacock was under a statutory duty to cooperate. 50. During the course of this meeting Ms Deacock also advised me that she was about to travel to Turkey on business for two weeks.” vi) On 27 February 2009, Jogo’s solicitors wrote to SGH; in the letter they set out an account of conversations with Ms Deacock in which she had said she was being bullied by SGH and the administrator. The response of SGH made that same day denied all the allegations vii) As Mr Bennett had heard nothing from Collyer Bristow, he tried to make contact with Ms Deacock himself on 24 March 2009. Collyer Bristow responded that same day stating that all contact should be through them and contact with her was inappropriate. SGH replied: “As we believe you are aware our clients have been attempting to interview Ms Deacock for some time, and despite repeated request your client has failed to make herself available for interview. Are you able to explain why there has been further delay in this regard? Finally we enclose a further copy of the comfort letter which was agreed with your client’s former solicitors, and which was forwarded to you under cover of our letter dated 26 February 2009.” viii) On 26 March 2009, Collyer Bristow replied stating that a statement was being finalised and would be sent to them; if there were any questions these would then be answered. The response of SGH was to state proceedings would be issued. The letter included the following sentence: “Indeed an appointment had been made for your client to attend Leonard Curtis for interview on 26 February 2009, which she failed to attend.” ix) As nothing further was heard, an application was made on 7 April 2009 under s.236 to compel the attendance of Ms Deacock with a return date of 9 June 2009. x) On 30 April 2009, Collyer Bristow sent a statement signed by Ms Deacock on 31 March 2009; it is in all respects relevant to these proceedings identical to the statement of the same date served in these proceedings to which I have referred at paragraph 12.iii). xi) After a hearing in the Companies Court on 13 May 2009, it was agreed that Ms Deacock would attend for interview on 15 May 2009; this was embodied in an order of Mr Registrar Baister. xii) On 15 May 2009, Ms Deacock was interviewed in the presence of Collyer Bristow, Mr Bennett and SGH. In the course of the interview she was asked about the letters she had signed about retention of title clauses with various suppliers including the companies connected with Jogo. She said that Mr Brafman would have come to Manchester with her and attended meetings and been aware of the letters signed by her at the time. There was nothing in this interview that in my view cast any real doubt on the evidence of Ms Deacock set out in the statement of 31 March 2009.

The Schedule – Matters to be undertaken by Dolly Deacock

[38]In his statement of 23 February 2011, Mr Bennett set out for the first time a very different account of the meeting with Ms Deacock he had had on 26 February 2009. i) He stated that he had made arrangements through Mr Lee Manning one of the administrators of Northworld to interview her. Mr Clyde Lester another supplier of Jet Star and someone who had known her for many years was going to accompany her, as it was anticipated it would be a difficult meeting for her. Collyer Bristow cancelled the meeting. He does not explain why, if as he said she was going to be accompanied by her solicitor, she needed Mr Lester. ii) He then received a phone call from Mr Manning who said he had spoken to Mr Lester who had said he thought he could persuade her to meet in the absence of lawyers. A short while later, Mr Lester phoned to say she would and they met at the Cumberland Hotel near his offices in London later that day. iii) Mr Lester told him that any discussions they had would be ‘off the record’ and she would not allow the meeting to be recorded. Mr Lester said Ms Deacock had been ‘got at’ by certain retention of title suppliers and their solicitor, Mr Hughes, had told her that a comfort letter offered by the solicitors was worthless. The administrators had agreed with her that if she confirmed that the letters were signed shortly before the administration, the administrators would not bring proceedings against her personally. iv) They met at 12.30; Mr Bennett took with him what he described as a “comfort letter” addressed to “whom it might concern” in which the administrators agreed not to bring proceedings against her, if she signed the letter attached. The draft of that letter contained a confirmation that the letters with retention of title terms with suppliers (including Jogo dated 3 June 2008) were not signed in June but signed by her in … [a blank space was left] and only signed because of extreme pressure from Mr Bulbinder Singh. v) He told her he was not out to get her, but wanted the truth. His statement went on to say: “Ms Deacock said to me a number of times that she felt terrible about the whole affair. The suppliers had taken her at her word that they would get paid and had only supplied goods because of her. She had worked in the clothing industry for 20 odd years and needed to carry on working in the business. She could not be seen to make an agreement to help the Administrators which would harm the suppliers. She was not prepared to sign a witness statement, but might sign the “to whom it might concern letter” we had prepared. She needed time to think about it.” vi) She had said that she might sign and give evidence if he came to terms with the suppliers other than Mr Bulbinder Singh as he had placed her under great pressure. His view was that she would not make a commitment. It was agreed that he would speak with the other suppliers about settlement whilst she was away. vii) His statement then continued: “I showed Ms Deacock the ‘To whom it may concern’ letter and said we needed to know what date to put into it as to when the letters were signed. In the first draft I showed her the date was left blank. I said I thought that she had signed the letters in October. Ms Deacock said that was wrong, and that the date to be inserted into the letter was November.” viii) He then had the draft altered and that date was inserted into the draft by his office. He exhibited to his statement a copy of the amended draft with the November date. The meeting ended. He arranged to speak to her, and he tried but did not succeed. ix) He was given by Mr Lester an explanation as to why Ms Deacock had cancelled the formal interview of 26 February 2009. Ms Deacock had told Mr Kamani on 25 February 2009 that she was going to admit that the letters had not been signed in June but shortly before the administration. Mr Kamani came to London that evening and put extreme pressure on her not to meet Mr Bennett and he had arranged for a different lawyer to represent her by the following morning.[39]It was accepted by Mr Peter Arden QC that the part of Mr Bennett’s statement set out at subparagraph 38 vii) above where he said that she said the letters were signed in November 2008 was a statement that put in issue whether Ms Deacock had signed the letters on 3 June 2008. No challenge was made to its admissibility on the basis it might have been made at a “without prejudice” meeting; that was it seems because Mr Bennett’s statement did not put forward sufficient for this to be argued and Ms Deacock had not been asked about the meeting. The question was whether the statement of Mr Bennett that Ms Deacock had said that the letters were signed in November 2008 was credible. In judging the credibility and reliability of that statement by Mr Bennett I have had regard to the following: i) The meeting with Ms Deacock was not mentioned in Mr Bennett’s statement in these proceedings dated 16 December 2009 or his statement in the Birmingham proceedings dated 3 June 2009. Indeed, paragraph 23.9 of the statement in the Birmingham proceedings is entirely inconsistent with such a meeting having taken place. ii) In his report to the court on 3 April 2009, his account of the meeting was entirely different to that set out in his statement of 23 February 2011; there is no reason why he could not have referred to the fact that he had been given an account by Ms Deacock, even if he considered it was privileged; his statement in the Birmingham proceedings had claimed privilege for the transcript of the interview. iii) The allegation that she had made this admission as to the date of signing the letter was not put at the interview under s.236 on 15 May 2009 when Ms Deacock was represented by Collyer Bristow; there was full opportunity to question her. Nor was she asked any question suggesting that the letters were signed on a date other than that which they bear. If the statement had been made by her, it plainly should have been put, unless there was a valid reason for not doing so. None has been given. iv) When the preliminary issues in the Birmingham proceedings were determined as set out at paragraph 14, nothing was adduced about the statement made by Ms Deacock at the Cumberland Hotel. If Ms Deacock said what was alleged, it was central to the issue. v) The circumstances in which the evidence was to be given in the claim by Peach Melba are opaque. As I have set out at paragraph 21, Ms Chesser had been sent the evidence of the administrators in the Peach Melba claim on 27 January 2011. As that claim was listed for trial on 21 February 2011, this would accord with the expectation that the evidence was being sent as it had by that time been exchanged. However, Mr Bennett’s account in his statement of 23 February 2011 was: “6. Two suppliers who commenced joint proceedings against Jet Star and the Administrators were Peach Melba Designs Limited (PMD) and Studio One Limited (SO). Jet Star and the Administrators defended the claims brought by PMD and SO, and the matter was listed to be heard in the High Court, Chancery Division in a three day trial due to take place during the week commencing 21 February 2011. Myself and others made witness statements in the proceedings commenced by PMD and SO. However evidence was not filed and exchanged as PMD and SO never indicated they were ready to do so. Instead we were able to settle the proceedings and the case was taken out of the list. 7. Prior to settlement, I prepared a further draft witness statement that I intended to rely on in opposition to the claim brought by PMD and SO, although that further evidence was never finalised. This witness statement I now make on behalf of the Appellant sets out the same facts and matters as would have been included in my further evidence to be finalised, filed and served in the PMD and SO proceedings had that matter been heard by the court.” vi) Mr Bennett does not give any explanation for his failure to mention what he was told by Ms Deacock earlier in these or any other proceedings. No note of the meeting has been provided. vii) The fact that he met Ms Deacock in the circumstances set out gives rise to issues as to the propriety of him so doing. He knew that Ms Deacock was legally represented and had declined to be formally interviewed as she wanted to take legal advice. Notwithstanding that knowledge, he arranged to see her the very same day to put an allegation of grave dishonesty by her. He took with him as an inducement a letter of comfort in different terms to the one his solicitors had sent to Ms Deacock’s previous solicitors and which his solicitors sent that day to her new solicitors.[40]The extent to which Mr Bennett’s account in his statement of 23 February 2011 can be regarded as credible has caused me some anxiety. The sole supporting document was the insertion of the November date into the comfort letter; that would have been insufficient. However, he is an officer of the court. Although his conduct as an officer of the court calls for a detailed explanation which plainly should have been given by him in his statement of 23 February 2011, he was not a party to these proceedings. He had not provided any explanation of the obvious questions to Internacionale; it is possible that for some unexpressed reason he felt he could not refer to what he says was said by Ms Deacock on 26 February 2009; one possible explanation is that he thought it was privileged as made at a without prejudice meeting. Furthermore it is right to take account of the fact that we were told that the administrators have no financial interest in the dispute, for in the event of Internacionale having to pay the claim (or any part of it), they have no recourse under their agreement with the administrator.[41]In the circumstances, I consider that the evidence from Mr Bennett to the effect that Ms Deacock had admitted that the letters were signed in November 2008 rather than on 3 June 2008 is relevant to the application for summary judgment. It could have a bearing on the outcome of the case and accordingly (unlike that of Mr Brafman) it ought to be allowed in on the appeal as satisfying the Ladd v Marshall criteria. Reconsidering the application for summary judgment in the light of this new evidence, it seems to me that it provides the defendant with a prospect of defending the claim which is more than fanciful, but not one which is very substantial; the word shadowy comes to mind. The doubts as to the probable success of the defence arise because of the circumstances that I have described in relation to the making of the statement. I would therefore allow the appeal, but I would impose on the Defendants a condition requiring the payment into court of a substantial sum.[42]The amount of the payment that would be required is not easy to assess given the size of the claim, £1.1m, and £200,000 interest and Internacionale’s contention that the claim is worth substantially less. However taking into account the value of the stock in the purchase agreement between Internacionale and the administrators, the probability that the value took into account third party claims and the very substantial mark ups in this trade, I consider that the amount should be £600,000, to include an element for interest. I would invite submissions as to the timing of the payment and any other consequential directions.[43]I agree.[44]I also agree.

Cited in 1 later judgment