Simms v Conlon & Anor [2007] EWHC 3041 (Ch)

[2007] EWHC 3041 (Ch)Case No HC 03C02706
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Wednesday, 31 st October 2007
Before
MR. JUSTICE DAVID RICHARDS
Between
PALIL SIMMSClaimant(1) MICHAEL AMBROSE CONLONDefendants(2) ROGER HARRISDefendant
Digital Transcription by Marten Walsh Cherer Ltd.,6 th Floor, 12-14 New Fetter Lane, London EC4A 1AGTelephone No: 020 7036 6000. Fax No: 020 7427 0093.Email: info@martenwalshcherer.com
The Claimant appeared in person for in personThe Defendants appeared in person for in person
JUDGMENT
[1]On 22nd March 2004 I gave judgment for Mr. Simms in this action for damages in the sum of £48,927.48p. and for an order that Mr. Conlon and Mr. Harris pay him £98,000 in monthly instalments of £2,000 commencing on 31st March 2004. Those orders were contained in paragraph 2 of my Order. Paragraph 3 of the Order provided as follows:
“Enforcement of the Order in paragraph 2 be stayed until determination of the claim of the defendants against the claimant arising in connection with the partnership formally carried on by the defendants and the claimant or until further order in the meantime with permission to the claimant to apply to lift the stay on five days notice to the defendants.”
[2]Mr. Simms now applies for the stay to be lifted on the grounds that Mr. Conlon and Mr. Harris have failed to prosecute their claim expeditiously.[3]The background, so far as it is necessary to refer to it, is that for over 20 years Mr. Simms and Mr. Conlon were partners in the firm Bower Cotton, formerly Bower Cotton & Bower, a firm of solicitors in London. In May 2000 six of the eight partners left the firm, leaving Mr. Simms and Mr. Conlon to practise under a revised name, The Bower Cotton Partnership. In September 2000 Mr. Harris joined the partnership as an equity partner and the partnership also employed three salaried partners.[4]In February 2002 the Law Society intervened in the practice of Mr. Simms on the basis of a report by the Office for the Supervision of Solicitors which raised serious issues in relation to the conduct by Mr. Simms of his practice. The Law Society initially suspended Mr. Simms’ practising certificate and then attached conditions to his continuation in practice which Mr. Simms considered made it impossible to resume his practice in the partnership.[5]The partnership was by then running into difficulties with its bank. The bank’s proposals required the consent of Mr. Simms as the provider of security for the partnership’s borrowings. He gave his consent on the basis of an agreement made on 15th May 2002 with Mr. Conlon and Mr. Harris, which I will call the May 2002 agreement. The judgment which I gave on 22nd March 2004 was on Mr. Simms’ claim to enforce the May 2002 agreement.[6]In evidence filed in Mr. Simms’ claim, Mr. Conlon and Mr. Harris raised various cross-claims which they asserted gave rise to a liability far in excess of the judgment sums, which they said were due from Mr. Simms to the partnership. The evidence before the court was insufficient to determine any liability of Mr. Simms and, as I recorded in paragraph 36 of my judgment, both Mr. Simms and counsel for Mr. Conlon and Mr. Harris submitted that the issue of such liability should not be decided in the proceedings then before me.[7]I continued in paragraph 36:
“In my judgment, the right course is to stay enforcement of the judgment in these proceedings until determination of the defendants’ claim against Mr. Simms or until further order, with liberty to Mr. Simms to apply to lift the stay. The defendants have now commenced proceedings and should prosecute them expeditiously. Failure to do so would entitle Mr. Simms to apply for the stay to be lifted.”
[8]In the meantime, disciplinary proceedings had been brought against Mr. Simms. Following a 14 day hearing in November and December 2003, the Solicitors Disciplinary Tribunal on 2nd February 2004 pronounced Mr. Simms guilty of conduct unbefitting a solicitor and ordered that he be struck off the Roll of Solicitors. The Tribunal promulgated its findings on 5th April 2004, finding that Mr. Simms had acted dishonestly in relation to a number of transactions.[9]In a judgment of Jonathan Parker LJ, to which I will later refer, he summarised the Tribunal’s conclusions as follows:
“By its findings, which were promulgated on 5th April 2004, the SDT expressed itself as satisfied beyond reasonable doubt that, among other things, from early 1997 onwards, Mr. Simms had been actively involved in making, promoting or facilitating transactions which, as he knew or as an honest solicitor would have known, were bogus in that they lacked an honest commercial purpose, and that in promoting such transactions Mr. Simms had made deceitful representations to third parties; that is to say, that in relation to such transactions, Mr. Simms had acted dishonestly.”
[10]Mr. Simms’ appeal against the Solicitors’ Disciplinary Tribunal’s order was dismissed by the Divisional Court on 17th March 2004. At the conclusion of its judgment, the Divisional Court (Latham LJ, Curtis J and Newman J) said at paragraph 188:
“The most serious finding of the Tribunal was, of course, that the appellant was dishonest. We agree with the Tribunal that the pattern of behaviour by the appellant establishes that he was not merely foolish and credulous; he was prepared on occasion dishonestly to mislead in relation to the purpose of various transactions and, indeed, in failing to disclose his receipt of $50,000 in one instance. Accordingly, we agree that his activities were, unfortunately, properly described as ‘dishonest’. That being the case, the order that the appellant be struck off the Roll is inevitable.”
[11]On 12th February 2004, after the hearing of Mr. Simms’ claim before me but before I gave judgment, Mr. Conlon and Mr. Harris issued proceedings against Mr. Simms. In their statement of case served with the claim form, they set out all or some of the cross-claims to which I referred in my judgment. They also alleged that Mr. Simms had made fraudulent misrepresentations and had fraudulently refrained from disclosing matters which it was his duty to disclose, whereby they were induced to enter into the partnership with him.[12]In support of these latter claims, Mr. Conlon and Mr. Harris expressly relied on the findings of the Solicitors’ Disciplinary Tribunal, although, of course, at that stage their detailed findings had not yet been published.[13]The effect of orders made in the action brought by Mr. Conlon and Mr. Harris, made on 10th February 2005 and 30th September 2005, that there was to be a trial concerned only with claims for fraudulent misrepresentation and fraudulent omission to make disclosure.[14]The remaining claims were not abandoned or struck out but would, implicitly, be the subject of further directions. No directions were at that stage made as regards the trial of those matters.[15]The trial, restricted to the matters which I have mentioned, took place before Lawrence Collins J. in November 2005. In his judgment handed down on 9th March 2006, Lawrence Collins J. found for Mr. Conlon and Mr. Harris and ordered an assessment of damages. He held that although on authority the findings of the Solicitors’ Disciplinary Tribunal were not admissible as evidence of their truth, it would, in the particular circumstance of the case, be an abuse of process for Mr. Simms to challenge the findings of the Tribunal. He also found on the evidence given by Mr. Simms before him that Mr. Simms had made dishonest misrepresentations to Mr. Conlon and Mr. Harris and had dishonestly concealed material facts from them.[16]Lawrence Collins J. gave permission to appeal and stayed the assessment of damages pending the appeal.[17]By its judgment dated 20th December 2006, the Court of Appeal allowed Mr. Simms’ appeal. The Court of Appeal agreed with the judge that the findings of the Tribunal were not admissible as evidence of the truth of the underlying facts, but also held that Mr. Simms was not precluded from mounting a defence which was contrary to the Tribunal’s findings and decision. In effect, therefore, Mr. Conlon and Mr. Harris had to prove their case in fraud against Mr. Simms in the usual way. Moreover, they held that in the particular circumstances of the case it would be unfair for the findings of dishonesty made by Lawrence Collins J. against Mr. Simms to stand.[18]The Court of Appeal ordered a retrial and made the following directions:(1) The respondents – that is to say, Mr. Conlon and Mr. Harris – were to re-amend their particulars of claim by 12 January 2007;(2) Mr. Simms was to re-amend his defence by 9 February 2007;(3) Mr. Conlon and Mr. Harris had until Friday, 23rd February 2007 to serve a re-amended reply;(4) There be further mutual disclosure by list by Friday, 9th March 2007;(5) There be inspection of any documents that either party wished from the lists and provision of a copy of the same in accordance with the CPR by Friday, 23rd March 2007;(6) The parties were to serve by mutual exchange any further evidence upon which they wished to rely by Friday, 13th April 2007, with either party being given liberty to call an expert witness as to loss; and(7) There be a CMD listed for one hour at the parties’ convenience to deal with any outstanding matters and to fix a trial window.[19]The directions were followed by the parties until mid-March 2007 when Mr. Conlon and Mr. Harris served their disclosure list. For reasons given by Mr. Simms in his evidence on this application he did not serve his list until 20th April 2007. Mr. Simms sought copies of some of the documents in the claimant’s list and also stated his readiness to exchange witness statements on 8th June 2007. Despite a number of letters reminding Mr. Conlon and Mr. Harris of their duty to give inspection and to exchange witness statements, there was no communication from them to Mr. Simms since April 2007 until they served evidence in response to the present application on about 25th October 2007.[20]Mr. Simms’ overall submission is that because of the failure of Mr. Conlon and Mr. Harris to prosecute expeditiously their claims against him, the stay on enforcement of the judgment against them should now be lifted. There are a number of elements to Mr. Simms’ case. First, he submits that the reason for the stay was to enable Mr. Conlon and Mr. Harris to prosecute their various cross-claims arising out of the partnership accounts, the lease of premises occupied by the partnership and other similar matters which were discussed by me in paragraphs 29 – 35 of my judgment of 22nd March 2004. For convenience, I will refer to these as “the other claims”. This, he submits, is apparent from paragraph 36 of my judgment. In fact, no progress has been made with those claims. All those claims, or at any rate all except those based on the accounts which had already been the subject of the order made in February 2005, were excluded from the trial held before Lawrence Collins J. because, as Mr. Simms says in evidence and has not, I think, been challenged by Mr. Conlon and Mr. Harris, Mr. Conlon and Mr. Harris had failed to take the steps necessary to get those matters ready for trial.[21]In my judgment, Mr. Simms is seeking to read the purpose and effect of my order for a stay too narrowly. The order states that enforcement, and I quote, “be stayed until the determination of the claim of the defendants against the claimant arising in connection with the partnership”. The order was dated 22nd March 2004. By then, as I recorded in paragraph 36 of my judgment, Mr. Conlon and Mr. Harris had issued their claim alleging, amongst other matters, dishonesty and non-disclosure against Mr. Simms. It was not a claim confined to what I have described as “the other claims”, although it is fair to record that at that stage these allegations of fraud seem to have been directed to rescission of the partnership agreements rather than a monetary claim for damages for deceit as was later claimed and added by amendment.[22]Mr. Simms accepts that an award of damages for deceit in these circumstances would provide Mr. Conlon and Mr. Harris with an equitable set-off. I do not consider that the order for a stay did not extend to claims arising out of the allegations of dishonesty made by Mr. Conlon and Mr. Harris in their proceedings commenced in February 2004. Even if it did not extend to them, the existence of such claims at the time of an application to lift the stay would have to be taken into account.[23]Secondly, Mr. Simms submits that much of the delay has been caused by the decision of Mr. Conlon and Mr. Harris to rely on the findings of the Solicitors’ Disciplinary Tribunal in the face of the difficulties to which I alluded in my judgment at paragraph 39. There is, I believe, nothing in this point. As Jonathan Parker LJ observed in paragraph 121 of his judgment on Mr. Simms’ appeal, it was clear from my judgment that I was not expressing a final conclusion on whether Mr. Conlon and Mr. Harris could successfully base their case on the Tribunal’s findings. That Mr. Conlon and Mr. Harris were putting forward a serious and substantial case for reliance on the Tribunal’s findings is shown by the decision of Lawrence Collins J. that they were entitled to do so. The fact that the Court of Appeal disagreed and allowed the appeal does not show that Mr. Conlon and Mr. Harris acted unreasonably or were guilty of delay because they put their case on that basis.[24]Thirdly, Mr. Simms relies on the delay in bringing their claim to trial before Lawrence Collins J. I do not think that such delays are now in point except to the extent that they contribute to the delay in the determination of the claims following the order of the Court of Appeal allowing Mr. Simms’ appeal.[25]There are two respects in which they may be said to contribute in this way. The first is that there was no progress in getting the other claims ready for trial. The second is that there has been no real attempt by Mr. Conlon and Mr. Harris to quantify any loss alleged by them to result from the dishonest misrepresentations and non-disclosures alleged against Mr. Simms. There is some force in both of these points.[26]However as regards the quantification of loss, it has to be acknowledged that both sides conducted the trial before Lawrence Collins J. on the basis that it was concerned with liability not quantum. Moreover, while he ordered an assessment of damages, Lawrence Collins J. also stayed it pending the determination of Mr. Simms’ appeal. So in the period following Lawrence Collins J’s judgment until the determination of the appeal, the occasion for further progress in relation to the quantification of loss did not arise.[27]I should record here that Mr. Simms did submit both to Lawrence Collins J. and to the Court of Appeal that there was a complete absence of evidence of any loss at all, such that Mr. Conlon and Mr. Harris were incapable of making good a cause of action in deceit. I need only record that both the judge and the Court of Appeal rejected that submission.[28]Fourthly, Mr. Simms relies on the delays since April 2007. On any footing, this is a substantial basis for his present application. Mr. Conlon and Mr. Harris have given their reasons for their inactivity in witness statements filed on this application. Mr. Harris states as follows:
“15. Mr. Simms has been in acute danger of being declared bankrupt since at least March 2007 as a result of his outstanding liability for costs arising in relation to the matter of Dadourian Group International & others v. Simms & others. Mr. Serota of Wallace & Co., who acts for the plaintiff, has been keeping me informed about the progress of that case. “16. In a conversation with Julia Forbes at Russell Cook on 24th October 2007 it was confirmed to me that all time limits have expired in relation to the statutory demand served by the Law Society on Mr. Simms for £277,000”
. I should interpose to say that Mr. Simms has a liability to the Law Society in respect of the costs of the Tribunal proceedings and the appeal. “So far as I am aware, bankruptcy proceedings against Mr. Simms are imminent. I was told that it seems likely that only a promise of some payment by Mr. Simms, which has not occurred, has delayed those proceedings from being issued. “17. In the light of the facts in para. 5 above” – I interpose to say that that must be a reference to paragraph 15 – “positive steps to progress the second action were not taken as it seemed inevitable that nothing would be recoverable from Mr. Simms in any event. To have moved forward at any pace would have incurred further counsel’s fees on my part. Mr. Conlon and I still owe approximately £44,000 to counsel in relation to the second action, and I did not want to add to that cost any further than was absolutely necessary.”[29]Mr. Conlon, in his witness statement, says:
“The reason I did no further work after 23rd April was because all would be a waste of time if the claimant were going to be made bankrupt. Paragraph 14: “I refer to exhibit MAC pages 3 and page 4 in which I told the claimant that I now suffer from depression which the doctors say relates to the consequences of the claimant’s dishonesty. The depression affects my ability to work.”
I do not think I need read any further from that paragraph.[30]It would seem that there has been a real prospect that Mr. Simms would be made bankrupt. This was considered by Warren J. in a judgment given by him on 11th July 2007 in the Dadourian litigation, the neutral reference to which is 20007 EWHC 1673 Chancery. See paragraphs 70 – 88 of that judgment, especially paragraphs 84 and 86 and the terms of a stay pending appeal ordered by Warren J. as explained in paragraph 88.[31]The prospect that Mr. Conlon and Mr. Harris could deal with a trustee in bankruptcy and perhaps resolve the whole matter without further litigation goes some way to explain their inactivity in the litigation but cannot, in my judgment, excuse it in the context of the stay on enforcement of Mr. Simms’ judgment against them. According to Mr. Simms’ evidence before me, he has probably averted the risk of being made bankrupt by the Law Society for their costs.[32]There are a number of other matters to which I should have regard in deciding whether now to lift the stay. First, all parties are now acting in person. Mr. Simms was an experienced litigator in his professional practice and he has conducted this litigation, so far as I can tell from the judgments, from his correspondence and from his appearance before me, in a competent manner. So far as Mr. Conlon and Mr. Harris are concerned, it is fair to record that their experience does not lie in litigation.[33]Secondly, as Mr. Conlon says in his evidence, he has been suffering from depression.[34]Thirdly, as it seems to me, although the substantial non-compliance with the directions of the Court of Appeal lie with Mr. Conlon and Mr. Harris, Mr. Simms has refused to provide documents which, I should have thought, he clearly should have provided. Mr. Conlon and Mr. Harris asked for disclosure of the transcripts of evidence before the Solicitors’ Disciplinary Tribunal. Mr. Simms has refused to provide them on the grounds that because the findings of the Tribunal could not be relied on as evidence of their truth before the Tribunal was inadmissible and not disclosable. This is a non sequitur. Unless irrelevant to the issues in the case against Mr. Simms, the evidence before the Tribunal in the form of transcripts is disclosable, except perhaps for certain evidence given in private, and, albeit as hearsay, would probably be admissible. Of course, the weight, if any, to be given to it would be a matter for the trial judge.[35]Fourthly and importantly, Mr. Conlon and Mr. Harris now realise that they must get on with this claim as a matter of urgency. They told me that they would be ready to exchange their witness statements by 6th November.[36]Both sides have relied on the financial position of the other. None of the parties appears to have substantial assets and all appear to face significant liabilities. Warren J., in a judgment mentioned earlier, summarised Mr. Simms’ own evidence as to his financial position at paragraphs 70 and 74-75. Both sides face a similar risk as regards the existing stay. If it is lifted but Mr. Conlon and Mr. Harris later establish their claim against Mr. Simms, there is a strong chance that they will not recover from him any amount paid in respect of the existing judgment. If it is not lifted and Mr. Conlon and Mr. Harris fail in their claim against Mr. Simms, there is a strong chance that Mr. Simms will not recover the amount of the judgment from them.[37]On balance, I have come to the conclusion that the stay should not be lifted at this point. Both Mr. Conlon and Mr. Harris must understand that this is almost certainly their last chance. Unless they now progress their claim with urgency, it will be difficult to resist a further application by Mr. Simms to lift the stay. The terms of my order as to the stay remain. Mr. Simms is entitled to apply to lift the stay on five days notice in the event of further delay. The liberty to apply is not restricted to delay but, plainly it would arise in the event of further delay on the part of Mr. Conlon and Mr. Harris.[38]There are two steps which must now be taken within a very short timetable. First, there must be an exchange of witness statements. Secondly, there must be a case management conference at which there can be decided, among other things, how this action is to be tried, whether all issues are to be tried at one trial or some issues ahead of others and whether liability and quantum are to be split. There is, if this action is to proceed, a crying need for a case management conference as a matter of urgency.[39]In the action brought by Mr. Conlon and Mr. Harris against Mr. Simms, I will give the following directions. First, I will extend time as provided in the order of the Court of Appeal for the exchange of witness statements to 9th November 2007. Secondly, I will direct that Mr. Conlon and Mr. Harris should immediately take steps to fix a case management conference before the Master. The case management conference is to be held not before 26th November, giving the parties two weeks to see each other’s witness statements and consider their positions, but I will order that an expedited date be given for that case management conference. On that basis, I dismiss the present application by Mr. Simms for the stay on the judgment against Mr. Conlon and Mr. Harris to be lifted. That concludes the matter so far as substance is concerned.