Eden v Parker [2016] EWHC 3302 (Ch)

[2016] EWHC 3302 (Ch)Claim No. B40MA091
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue MANCHESTER DISTRICT REGISTRY, Manchester Civil Justice Centre,
1 Bridge Street West,
Venue Manchester M60 9DJ
Before
His Honour Judge Hodge QC sitting as a Judge of the High Court
Between
MR JACK WYATT EDENClaimantMR BARRY MARTIN PARKERDefendantNo. 3223 of 2015PetitionerAND BETWEENPetitionerMR JACK WYATT EDENPetitionerMR BARRY MARTIN PARKERRespondentsCASTLE HALL PROPERTIES LLPRespondents for claimant and petitioner: Mr Stephen Connolly instructed by Eden & Co, Manchester for defendant and first respondent: Mr Malcolm McEwan, instructed by Linder Myers, ManchesterHearing Hearing dates: 15-17, 21-24, 28, 29 November, 1 December 2016Judgment date: 19 December 2016I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.David R. HodgeAPPROVED CORRECTED JUDGMENTIntroductionDate 2016-12-19
[1]This is the trial of(1) a Part 7 claim issued on 11 June 2015 for (a) damages for breach of contract, misrepresentation and negligent misstatement arising out of the purchase, renovation and letting of what are now seven contiguous terraced houses known as and situated at 2 to 10 Howe Street and 313 and 313A Great Clowes Street, Salford (together “the Howe Street properties”) and (b) the repayment of the balance of moneys advanced by the claimant to the defendant to enable them to complete the purchase of a small industrial estate at Mount Pleasant, Oldham (“Mount Pleasant”); and(2) an unfair prejudice petition presented on 27 October 2015 in relation to the affairs of Castle Hall Properties LLP (“the LLP”) which was the vehicle through which the claimant and the defendant completed the purchase, renovation and letting of the two properties as equal joint venturers. The claimant and petitioner, Mr Jack Eden, is a solicitor of some 40 years’ standing who practises in the field of personal injury although he also has extensive business interests outside the law. The defendant and first respondent, Mr Barry Parker, is a long-standing and experienced property owner and developer. Both men are wealthy individuals who are now in their mid sixties and, until the present dispute, they had been close friends for many years. Mr Eden is represented by Mr Stephen Connolly (of counsel), instructed by Eden & Co and Mr Parker is represented by Mr Malcolm McEwan (also of counsel), instructed by Linder Myers. The principal dispute in the Part 7 claim is one of fact and centres on whether, on three separate occasions, Mr Parker had orally represented and/or warranted to Mr Eden that he (Mr Parker) would be able to renovate the Howe Street properties at a total cost of less than £560,000 (or £80,000 for each of seven houses) and, in addition, whether, on a visit Mr Jack Eden (and on his case) his second son, James, had made to view the exterior of Howe Street with Mr Parker prior to its purchase in or about June or July 2009 (which formed part of the last of these three occasions), Mr Parker had further represented and warranted that he had been inside the Howe Street properties and that they were in the condition one would expect.

The trial

[2]The trial took place in Manchester over 10 court days. On the first three days (Tuesday 15 to Thursday 17 November) I heard from Mr Eden and his eight live witnesses. Three further witnesses for the claimant were not required to attend court. Of the claimant’s witnesses, only Mr Eden was in the witness box for any substantial period of time, for a total of about 6 hours, starting just before noon on day 1 of the trial and concluding shortly after the luncheon adjournment on day 2. Over the next four court days (Monday 21 to Thursday 24 November) I heard from Mr Parker and his six live witnesses although his last witness, Miss Stacey Leonard, was briefly re-called on Monday 28 November after she had had the opportunity of making further investigations into the accounting records of the LLP and a separate property management business carried on by Mr Parker (with his wife Helen) under the style of “BM & HP Parker Properties” (“Parker Properties”). One further witness for the defendant was not required to attend court. Of the defendant’s witnesses, only Mr Parker was in the witness box for any substantial period of time, for a total of over 10 hours, starting at 10.30 on the morning of day 4 of the trial and concluding at the luncheon adjournment on day 6 (with two witnesses, Mr Dawson and Mr Oliver, having been interposed for about 50 minutes after lunch on Day 5 and for about 30 minutes after lunch on Day 6 respectively). On Day 8 (Monday 28 November) I heard concurrent expert evidence from the two quantity surveyors (Mr Paul Rigby for the claimant and Mr Tony Mancini for defendant). On day 9 (Tuesday 29 November) I heard concurrent expert evidence from the two property valuers (Mr Gareth Kreike for the claimant and Mr David McKee for the defendant). Following a day’s adjournment for counsel to prepare written closing submissions, oral closing speeches were delivered on Day 10 (Thursday 1 December) after which I reserved judgment. During the course of the hearing, between about 9.30 and 10.30 on the morning of Day 5 (Tuesday 22 November), I viewed the exterior of Howe Street in the presence of counsel, the claimant and the defendant. Although informative, the view did not prove as helpful as I had hoped it might in assisting me to resolve conflicts between the evidence of Mr Jack Eden and his second son, James on the one hand and Mr Barry Parker on the other as to what had passed on a visit Mr Jack Eden (and on his case) James had made to view the exterior of the Howe Street properties with Mr Parker prior to their purchase in or about June or July 2009.

Background

[3]I can take the background to this litigation in part from Mr Connolly’s opening skeleton and in part from the statements of case and witness statements. At some time in 2009, Mr Eden and Mr Parker began discussions about the possibility of working on property transactions together. There is a dispute of fact (which I do not find it necessary to resolve) as to which of Mr Eden and Mr Parker instigated those discussions and as to precisely when the matter was first raised but it is common ground that in or around June 2009 Mr Parker brought to Mr Eden’s attention the opportunity to purchase and renovate the Howe Street properties. In his witness statement, Mr Parker said that at that time the Howe Street properties were “derelict, had been damaged by fire and were in a very poor state … The Properties were boarded up and inaccessible to the public.” In cross-examination, Mr Eden could not recall exactly how the properties had looked at the time he had viewed them from the outside but he accepted that they were boarded up and he did not look to see if there were any padlocks on the doors. Later he acknowledged that it was obvious that the properties had been in a bad state. Mr Eden sets out the detail of the discussions in his particulars of claim and his witness statement. In paragraph 8 of his defence Mr Parker asserts that he does not possess the “apparent very specific powers of recall claimed” by Mr Eden as to “the times, places, sequence of events and detail of the meetings and conversations” which led the parties to the acquisition of the Howe Street properties; although Mr Parker does then purport to set out “his clear recollection” in succeeding paragraphs of his defence. His witness statement is also notably deficient on matters of detail. It is fair to say that Mr Parker expanded considerably upon his “clear recollection” in his evidence from the witness box.[4]It is Mr Eden’s case that Mr Parker raised the opportunity to purchase and renovate the Howe Street properties on an occasion when Mr Eden and his second son, James, visited Mr Parker at his home. It is the claimant’s evidence and case that during the course of that discussion Mr Parker told Mr Eden and James:(1) that the Howe Street properties would cost no more than £315,000 to purchase;(2) that he would be able to renovate the existing houses very quickly and at a cost of less than £80,000 for each of the seven houses (i.e. for a total sum of less than £560,000) as he had access to his own pool of labour and a network of suppliers from whom he would pass on the benefit of bulk purchases at wholesale rates or lower;(3) that there was a ready market to let the renovated houses to Orthodox Jewish families; and(4) that the development would generate a healthy profit for them both. Mr Eden claims that at this early point in the discussions the possibility of renovation and sale was discussed but this was quickly discounted in favour of a buy to let scheme and the discussions and the eventual deal proceeded solely on the basis of a buy and renovate to let scheme. At that point Mr Eden and James did not commit to any deal but Mr Eden did register his interest to the extent of saying that it was something that he would give some further consideration to. This was the occasion of the first of the representations relied on by Mr Eden. Mr Parker accepts that at an early stage he did mention the figure of £80,000 per house to Mr Eden as a possible renovation cost; but he says that that was a wholly provisional and tentative estimate, as he made clear and as would, in any case, have been apparent to Mr Eden, as any reasonable person would have understood it to have been. Mr Parker denies that he ever said that the cost of the development work would be limited to £80,000 per house, or £560,000 overall, or that he ever guaranteed or promised that cost, or any other cost figure. In cross-examination, Mr Parker emphasised that he had told Mr Eden that his estimate of £80,000 for each house was subject to inspection and the work specification and that for him to have promised that the works would not exceed that figure would have been impossible and unfair, stressing that he was “not totally stupid”. According to Mr Parker (in cross-examination) the £80,000 estimate had been given on two occasions, once during the course of a telephone conversation with Mr Eden earlier on the day of the visit by Mr Eden and his son, James, to Mr Parker’s house and again during that visit (although the discussion about the Howe Street properties had occupied very little time). When asked in cross-examination about having guaranteed that the works would not exceed £80,000 per house, Mr Parker’s emphatic and repeated response was that it was a lie; it was just “rubbish”. What, Mr Parker asked rhetorically, was the specification for the works?[5]In his original defence Mr Parker had asserted that his initial appraisal had been that the Howe Street properties were ripe for development to produce seven individual houses for sale; but in an amended defence, produced as recently as 13 October 2016, Mr Parker asserts that the estate agents’ particulars described only six houses (as did the later sale contract and transfer form); and that it was only after completion of the purchase, when he gained access to the properties, that a seventh house was identified. Mr Eden’s evidence is that Mr Parker was always aware that there were seven houses, even though the agents’ sales particulars described them as “six terraced properties”, with five on Howe Street “plus the end terrace 313 Great Clowes Street”. According to Mr Eden in cross-examination, Mr Parker told him that he had been in touch with the architects who had been acting for the owner of the properties, that he had seen the plans, and Mr Parker said categorically that there going to be seven houses. If Mr Parker did say that he had seen the plans, it would have been untrue because I am satisfied from the evidence of the architect, Mr Frank Smith, that his practice would not have released the plans without receiving the payment that was outstanding for them and this was only forthcoming on completion of the purchase by the LLP. In his witness statement (at paragraph 26) Mr Parker said that he had requested the plans from the selling agents but that he could not recall ever having received them. Mr Parker was emphatic in his denial that he had not known that there was the potential for a development of seven houses:
“Read my lips. I did not.”
Mr Parker’s evidence was that it had always been intended to develop the properties for sale, and that it was only as the project was nearing completion that Mr Eden had suggested, and Mr Parker had agreed, that as the property market was still in a poor state, they should rent the properties out instead. This is not consistent with the letter from Mr Parker’s former solicitors, Lopian Wagner, dated 15 April 2015 where (at paragraph 8) it was asserted that it was at or around the time of the site visit (referred to below) that Mr Eden had referred to his wish to rent out the Howe Street properties once the renovation works were complete.[6]About a week later Mr Eden says that he and Mr Parker met for lunch at the Tai Pan restaurant in Manchester. It is Mr Eden’s evidence and case that at this lunch Mr Parker once again raised the potential purchase and renovation of the Howe Street properties, asking Mr Eden whether he had made a decision. Mr Eden’s response was that he wanted to see the site for himself but providing that the purchase price would not be greater than £315,000 and the renovation costs would not be greater than £560,000, then he was happy to give it serious thought. In response to that Mr Parker told Mr Eden that the purchase cost would not be more than £315,000 and that the renovation costs of less than £80,000 per house were realistic and readily achievable. This was the occasion of the second alleged representation. In his defence Mr Parker accepted that he had frequently met and dined with Mr Eden at the Tai Pan restaurant but he could not recall this specific occasion; and he maintained this position in cross-examination. He does accept that at some point both men agreed to look at the Howe Street properties.[7]It is the claimant’s evidence and case that a site visit to the Howe Street properties was arranged and took place a few days later. Mr Eden and his son, James, met Mr Parker at the latter’s offices on Great Clowes Street, just down the road from the Howe Street properties, and they walked over to them on the opposite side of the road. The claimant’s evidence is that the properties were about 75 yards from Mr Parker’s office although my own assessment at the site view was that they are about 150 yards apart. In his defence Mr Parker did not admit the presence of James at the site visit or at any later discussions; but in cross-examination Mr Parker vigorously denied that James was present at the site visit at all. At the site meeting the parties viewed the Howe Street properties from the outside, according to the claimant’s evidence walking around them a couple of times, and Mr Parker enlarged upon his plans for the site. It is Mr Eden’s evidence and case (supported by the evidence of James) that in the course of the site visit, and in the context of discussions as to the merits of proceeding with the purchase and renovation, Mr Parker told Mr Eden and James that he knew the Howe Street properties well and he gave a detailed explanation of the proposed scheme to renovate the seven houses. Mr Parker also said that he had been inside and had inspected the properties and that they were in the condition one would expect. This is the alleged “internal inspection representation”. In cross-examination, Mr Eden said that it would not have made sense for Mr Parker not to have gone inside the properties. Mr Eden was not sure how, without going inside, Mr Parker could have worked out how much it was going to cost to do the renovation work. Mr Parker told him he had been inside the properties and Mr Eden had relied on that assurance. For a property expert like Mr Parker it would have been “bizarre” for Mr Parker to have purchased a property he was not proposing to knock down without having gone inside. It was a constant refrain of Mr Eden’s evidence that he had been relying on “an expert”. Mr Eden maintained that the failure to mention the internal inspection representation in pre-action correspondence and in the particulars of claim – it first surfaced in the reply – was “an oversight”. The claimant’s evidence and case is that the explanation of the scheme that he and James were given was sufficiently detailed that any specific concerns about the practicalities of the scheme were allayed and they were happy to talk in more detail about the structure of the deal. That was the only time prior to their purchase that the claimant visited the Howe Street properties.[8]Following the site visit, Mr Eden, Mr Parker and James are said by the claimant to have retired to the Fort Retail Park for coffee and to continue the discussion. Mr Parker accepts that this was a venue for meeting and discussing matters between himself and Mr Eden and that they could have gone there for a coffee after the site visit but he has no recollection of doing so, although he is adamant that, if they did, James was not present. It is Mr Eden’s evidence and case that at this meeting binding terms were agreed between him and Mr Parker for a joint venture agreement for the purchase and renovation of the Howe Street properties. Mr Eden sets out the alleged exchanges at paragraphs 12 to 17 of the particulars of claim, which included the following:(1) Mr Eden told Mr Parker that he was interested in the purchase and renovation of the Howe Street properties and said words to the effect that there was a lot of building there, that doing the job (i.e. the renovation) would be way beyond him and that he would have to rely on Mr Parker.(2) Mr Eden continued by saying words to the effect that he did not mind putting the finances up but that there was not much else he could do on the project.(3) Mr Parker responded and said words to the effect of:
“Jack that is fine. I do these things all the time and I have got the men and the material to do it”. (4) James then joined in the discussion and began to ask Mr Parker detailed questions about the cost of renovation in order to test his earlier statements that the renovation work could be undertaken for less than £80,000 per house (or less than £560,000 in total). After approximately a minute of discussion between James and Mr Parker, Mr Eden cut the discussion short and asked Mr Parker specifically and directly whether or not he would guarantee that the whole of the renovation project would be completed for less than £80,000 per house (or less than £560,000 in total). (5) In response to that direct question, Mr Parker allegedly said, unequivocally, words to the effect of “Yes, I could do this project for under £80,000 per house standing on my head”
. This is the final alleged representation. In response to that, it is said by the claimant that he said words to the effect of:
“Right, on that basis we’ll buy the property 50/50. I’ll put up the money and just charge nominal interest at 2.5% over base compounded quarterly with the money being repayable on demand. And you’ll do the renovation work”
. In response to that Mr Parker is said to have said words to the effect that whilst he would do all of the renovation works, he should receive an administration fee during the course of the works. When asked how much he was thinking of, Mr Parker said £600 a week. Despite the protestations of James, Mr Eden agreed to pay that fee to Mr Parker. Mr Eden then went on to say that Mr Parker should now go off and sort out the purchase with the agent and he agreed to do so. It is the claimant’s case that in reliance upon these representations, at this meeting he entered into a binding oral agreement with Mr Parker pursuant to which they agreed on a joint venture basis to purchase and renovate the Howe Street properties. Mr Parker puts his case slightly differently and, whilst apparently accepting that there was a binding joint venture agreement, he alleges that it did not come into effect until the purchase of the Howe Street properties. In practice it matters little whether the agreement became binding at the alleged Fort Retail Park meeting or when the parties exchanged contracts with the vendor for the purchase of the Howe Street properties (on 14 August 2009), since neither party alleges that any further negotiation as to terms took place after the Fort Retail Park meeting.[9]As to the terms of the joint venture agreement, it is the claimant’s case that the following terms were expressly or by implication agreed: (1). Mr Eden would provide the funding for the purchase of the Howe Street properties and for their renovation. (2). The moneys paid by Mr Eden would attract interest at a rate of 2.5% above base compounded at quarterly rests. (3). The money paid by Mr Eden would be repayable on demand. (4). Mr Parker would be solely responsible for the renovation of the Howe Street properties and would complete the renovation work for a total sum of less than £560,000 (or less than £80,000 per house). (5). Either as an express term or by necessary implication, insofar as the cost of the renovation works exceeded the total sum of £560,000 (or £80,000 per house), Mr Parker would be solely responsible for and would meet such extra costs. (6). During the term of the renovation work, Mr Parker would be paid a weekly fee of £600 to cover his administration and infrastructure costs and other miscellaneous overheads. In his statements of case, Mr Parker did not appear to dissent from any of these terms save for those at (4) and (5) above. That dissent arose from two sources:(1) Mr Parker’s denial that he gave the guarantee requested by Mr Eden and(2) his contention that there is no scope to imply the term alleged at (5) as such a term would be an absurd thing for Mr Parker to have agreed, by implication or otherwise. In support of the alleged guarantee the claimant relies upon his own evidence, supported by that of his son James, upon Mr Parker’s lack of detailed recollection, and, in addition, upon evidence from Mr Terry Veeder, the accountant of the LLP, from Mr Robert Greenwood, an experienced civil litigator and the head of a department at Eden & Co, and from Miss Victoria Whitehurst, the in-house bookkeeper/accountant at Eden & Co, as to their knowledge of Mr Parker’s guarantee to Mr Eden. In cross-examination, however, Mr Parker appeared to deny that there had been any agreement as to the payment of interest until the production of a written memorandum purporting to record the terms of the deal in December 2009.[10]The joint venture agreement having been concluded, Mr Parker proceeded to negotiate the purchase of the Howe Street properties at the price of £300,000. (By emails to the selling agents, David Currie, dated 10 June 2009 Mr Parker had previously offered, subject to contract, £200,000 cash “for the 6 properties, detailed” with a seven day completion period. Mr Parker’s evidence was that he had made this offer before introducing the Howe Street properties to Mr Eden) Contracts in the name of Messrs Eden and Parker were exchanged with the vendor on 14 August 2009 for the purchase of 2-10 (even) Howe Street and 313 Great Clowes Street. Between then and completion the parties agreed to complete the purchase in the name of the LLP. The LLP was formed on 1 September 2009, with Messrs Eden and Parker as the sole two equal members. The purchase was completed on 15 September 2009 in the name of the LLP, with Mr Eden providing the entirety of the purchase price and associated costs of purchase.[11]Thereafter, Mr Parker proceeded with the renovation of the Howe Street properties in accordance with the terms of his agreement with Mr Eden. A brief one page document (at D3/244) headed “Agreement for the Finance, Fees, Refurbishment and Other Costs Associated with the Acquisition and Development” of the Howe Street properties (which Mr Eden described as an “aide memoire”) was signed by Mr Eden and Mr Parker and dated 16 December 2009 and confirmed their agreement to the following five numbered terms: (1). An administration charge of £600 per week would be payable to Parker Properties by the LLP to cover administration and other miscellaneous overheads. The payments would cease on the discretion of either party. (2). It was accepted that Mr Jack Eden had personally advanced the acquisition finance for the seven dwellings. (3). It was accepted that Mr Jack Eden had personally advanced the finance for purchase fees, legal costs, stamp duty and all other costs associated with the purchase of the property. (4). All monies advanced to the LLP and/or Parker Properties (including those cited in points 2 and 3 above) by Jack Eden should be repaid at an agreed interest rate of 2.5% over RBS Base rate. Interest was to be compounded and charged quarterly. (5). It was agreed that all monies due and outstanding to Jack Eden would be discharged by the LLP to Jack Eden in full and on demand. Mr Eden said that he had arranged for this brief memorandum to be drawn up and signed after reflecting that there was no written record of the agreement at all to reflect the position should either of the parties die. On 1 March 2013 Mr Eden sent an email to Mr Parker (copied to Victoria Whitehurst) at D6/979 confirming that he had put £200,000 more into Mount Pleasant than Mr Parker and that he was being repaid at an agreed interest rate of 2.5% over RBS base rate, interest being compounded and charged quarterly. This was said to be “as per all our agreements”; and Mr Eden attached a copy of the 16 December 2009 memorandum to assist Mr Parker. Mr Parker endorsed the email (in manuscript): “Agreed Barry M Parker April 27th 2013” and he signed/initialled a hard copy of the attached memorandum and dated it April/27/2013.[12]At paragraph 31 of his defence Mr Parker admitted that the 16 December 2009 memorandum “set out the terms on which the parties were to proceed with the purchase and refurbishment of the Howe Street Property”. In cross-examination, however, Mr Parker questioned Mr Eden’s entitlement to interest on more than half of the finance he had provided (on the basis that he should only be entitled to interest on the half of the investment which he had funded on Mr Parker’s behalf and not on Mr Eden’s own half) despite the fact that the memorandum is clear as to Mr Eden’s entitlement to interest on all the moneys he had advanced to the LLP. As Mr McEwan recognised in closing, since the moneys advanced are to be treated as a loan to the LLP, which is then liable to repay interest on the full amount, Mr Eden and Mr Parker are effectively discharging that burden equally so that the perceived injustice which so concerned Mr Parker does not arise. Mr Parker asserts that the absence of any reference in the memorandum to Mr Eden’s supposed guarantee is telling. Mr Eden’s response is that the memorandum was a mere aide memoire rather than a comprehensive record, that at the time it was prepared only about £100,000 of refurbishment costs had been incurred, and that there was no suggestion that the limit of £560,000 would be reached never mind exceeded. In cross-examination Mr Eden said that it had not been in his mind to insert reference to the guarantee:
“It was just about the finances; that’s all”
. He added that with hindsight one could accuse him of stupidity, but that he was not dishonest. In cross-examination Mr Parker asserted (for the first time) that he had been “scared stiff” when he had been presented with this undated memorandum to sign and that he had dated it because he had been concerned that Mr Eden might back-date it to the purchase of the properties in September 2009. He described it as “an aid to stuff me”. Later, he said that the new term as to interest distorted the whole deal.[13]By June 2010, however, the ceiling of £560,000 for the renovation cost had been reached and inquiries had revealed that the refurbishment works were a long way off being complete. It is the claimant’s case that having been appraised of that fact by his in-house bookkeeper/accountant, Miss Victoria Whitehurst, he raised the matter with Mr Parker who agreed that he would check the position and revert back to Mr Eden. On Mr Eden’s case he did so at a lunch at Croma restaurant in Prestwich at which they discussed the matter further. At that lunch, Mr Parker is said to have been relaxed and candid. He admitted that the costs had gone beyond the cap and would exceed it by some margin and that the costs had not gone at all as he had promised. Mr Parker asked Mr Eden to continue the funding of the refurbishment on the basis that he did not have the means to do so himself and he offered to make it up to Mr Eden on “the next deal”. Faced with an incomplete and unfinished building, and with the refusal or inability of Mr Parker to fund the balance, Mr Eden says that he came to the conclusion that he really had no option but to mitigate his loss by continuing to fund the completion of the works, not as part of a deal for Mr Parker to make it up on “the next deal”, but rather as the least-worst way of securing his investment to date and minimising his losses going forward. The claimant contends that Mr Parker’s invitation at the lunch for Mr Eden to continue funding opened the door to him mitigating his loss in that way and that Mr Parker cannot sensibly assert that Mr Eden acted unreasonably in mitigating his loss by doing so. The claimant notes that there is no mention of this lunch meeting in Mr Parker’s witness evidence at all. In cross-examination Mr Parker said that he had no recollection of the alleged £560,000 cap on the costs of the renovation works being discussed at Croma restaurant or anywhere else:
“Rubbish. It never happened.”
After June 2010 Mr Eden continued to fund the cost of the renovation works, with the final payment being made by him on 2 March 2011. It is common ground that he funded the entirety of the cost of the renovation works down to their completion at a cost to him of £1,010,000. In consequence, the amount spent by Mr Eden over and above Mr Parker’s alleged guarantee amounts to £450,000. It is Mr Parker’s evidence and case that the renovation of all of the Howe Street properties was not fully completed until the early part of 2011.[14]Independently of the purchase and renovation of the Howe Street properties, in or around February 2010, Mr Eden was offered the opportunity to purchase Mount Pleasant. Whilst there is an issue of fact as to how the agreement between Mr Eden and Mr Parker came about, it appears to be common ground that they agreed to purchase Mount Pleasant jointly on a 50/50 basis through the LLP, with each party providing one half of the purchase price of £395,000. In pursuance of that agreement, contracts were exchanged on 27 July 2010 with Mr Parker paying Mr Eden one half of the deposit that the latter had already paid (£19,750). Shortly before completion, however, Mr Parker told Mr Eden that he had short term cash flow difficulties and could not pay the whole of his remaining half share of the purchase price immediately and he asked Mr Eden to subsidise a part of his share of the purchase price for a few weeks. Left with no real option but to accede to this request, Mr Eden agreed to provide Mr Parker with short term funding (for a few weeks) on his usual terms as to interest (2.5% above RBS base rate, compounded quarterly). Ultimately, Mr Eden subsidised Mr Parker’s contribution in the amount of £100,000. Notwithstanding those few weeks passing, Mr Parker did not repay Mr Eden. There was no agreement between the parties to compound the debt but, as a matter of practicality, since completion of the transaction the whole of the rents from Mount Pleasant have been appropriated by Mr Eden, with 50% being credited to Mr Parker in reduction of his debt. At the time of issue of the Part 7 claim, the balance due from Mr Parker was in the order of £46,000. Demand for payment had been made but had not been met. With the passage of time, the balance outstanding as at 31 October 2016 was £20,898. On this aspect of the case, Mr McEwan’s position in closing was that if Mr Eden wished to depart from the established practice of repayment from the rental income from Mount Pleasant, then rather than take up court time Mr Parker could simply repay the current balance.[15]Returning to the Howe Street properties, since about 2012 Mr Eden has been seeking from Mr Parker, as the member of the LLP solely responsible for the management of the Howe Street properties, details of(1) the actual cost of the refurbishment of the properties;(2) the rental income generated by the properties; and(3) the cost incurred in the maintenance and management of the properties. There is said to have been a wholesale failure on the part of Mr Parker to provide complete information in relation to each of these three items. At paragraph 43 of his opening skeleton argument Mr Connolly provides a chronology which is said to illustrate the difficulties that Mr Eden has faced in obtaining a full and accurate picture of the financial affairs of the LLP and Mr Parker’s management of the Howe Street properties. In his witness statement Mr Terry Veeder (who was Mr Eden’s personal and professional accountant as well as the accountant for the LLP) stated that in the course of seeking information about the invoices and expenses of the joint venture, he had mentioned to Mr Parker his guarantee that the costs of the Howe Street project should be under £560,000 and Mr Parker had acknowledged the guarantee. Mr Veeder said that he had no doubt from his discussions with Mr Parker that the latter was aware of his liability under the guarantee. In cross-examination, Mr Veeder accepted that Mr Eden had known at the time of his inquiry what had been spent but his concern had been as to what it had been spent on. Mr Veeder accepted that he had made no note of his conversation with Mr Parker and that he had written no letter confirming it. He explained that his knowledge of the guarantee “would have come about” as a result of expressing his concerns to Mr Eden about him entering into the partnership with Mr Parker at the time the joint venture was first under discussion. Mr Eden had tried to persuade Mr Veeder that things could not go wrong because of the guarantee. I found Mr Veeder to be an apparently competent, reliable, considered and credible witness.[16]There is one final incident which I must relate as part of the narrative history. It took place during a social lunch at the Kabana restaurant or café in Manchester on 11 February 2014 attended by Messrs Eden, Parker and Greenwood. Mr Eden’s account is to be found at paragraphs 90 and 91 of his witness statement; and the lunch meeting was the sole matter addressed by Mr Greenwood in his evidence. Both men say that Mr Eden raised the issue of Mr Parker’s guarantee and his performance in the Howe Street development “to put his feet back on the ground” (Mr Eden) or “to bring Barry back to earth” (Mr Greenwood). They say that Mr Parker “conceded that he [had] failed to meet the guarantee” (Mr Eden) and that “Barry acknowledged it and that he had got that one wrong” (Mr Greenwood). In cross-examination Mr Greenwood said that Mr Eden was not angry; it was more like banter, with Mr Eden putting Barry back into his place in a light-hearted way. Mr Greenwood was not asked about any guarantee in cross-examination. In answer to a question from the bench at the end of his evidence, Mr Greenwood said that Mr Eden had told Mr Parker that the latter had guaranteed that the properties would cost less than £80,000 each and (when asked by the court) Mr Greenwood said that he could recall the word “guarantee” being used. However, there was no suggestion that Mr Parker owed Mr Eden any money as a result. Mr Greenwood had not known what it was all about at the time; and he said that his witness statement reflected his full recollection of the incident. Mr Parker did not refer to this specific incident in his witness statement, which he sought to explain away in cross-examination on the basis that this had been unnecessary because it was a “miniscule meeting” and he could have mentioned a thousand things in his witness statement. What he had said (at paragraph 23) was that “the figure of £80,000 was never revisited or repeated throughout the course of the development process and there was no further reference to it.” In cross-examination, Mr Parker acknowledged that this lunch had taken place but he was emphatic that it was not Mr Eden but Mr Greenwood who had first asked about the £80,000 per house, which Mr Parker had thought was “a very strange question”. Mr Parker had replied that:
“You win some, you lose some. It was only an estimate.”
Mr Parker said that he had not acknowledged the guarantee but rather the situation. He said that he had thought at the time that he was being entrapped by Mr Eden and Mr Greenwood into acknowledging that he had entered into a contract about £80,000 per house and that he had been annoyed with Mr Greenwood; and he accused him of lying about what had been said. I did not form the impression that Mr Greenwood was lying or that he was an unreliable witness. I find Mr Parker’s account in the witness box difficult, if not impossible, to reconcile with the assertion at paragraph 23 of his witness statement.

Assessment of the witnesses

[17]As already mentioned, the principal dispute in the Part 7 claim turns on whether Mr Parker made the alleged representation that he had inspected the interior of the Howe Street properties and the alleged representations and warranty as to their maximum renovation cost. It is therefore necessary for me to assess the reliability and credibility of Mr Eden and of Mr Parker and, to a lesser extent, of Mr Eden’s supporting witnesses for, as Mr McEwan pointed out, Mr Parker has the disadvantage of having been on his own on the occasion of all of the important alleged conversations on which Mr Eden relies.[18]In his witness statement Mr Parker said that he had always considered Mr Eden to be a well educated, decent and honourable man although he now felt this view to have been tainted as a result of these proceedings. In the course of his cross-examination, however, Mr Parker was prepared to accuse Mr Eden (and two of his professional witnesses, Mr Veeder and Mr Greenwood, both men of good standing, as well as a number of the claimant’s other witnesses) of dishonesty and of giving false evidence. In closing, Mr Connolly emphasised Mr Eden’s unblemished record as a solicitor of over 40 years’ standing and the risks that he would be running by giving false evidence to the court. Mr Connolly acknowledged that Mr Eden had got a little excitable towards the end of his cross-examination when he had accused Mr Parker of dishonesty and of being a seasoned liar; but he put that down to the accusation that Mr Eden had been trading on his reputation as a solicitor and had been contrasting that with how Mr Parker would appear to the court in the light of an earlier assessment of him made by His Honour Judge Maddocks (referred to later). Mr Connolly submitted that otherwise Mr Eden had given his evidence with calmness and candour, making appropriate concessions and answering questions in a straightforward, open and honest manner. He invited the court to find that Mr Eden was a reliable witness and to accept his evidence in its entirety. In weighing that submission, it is necessary to bear in mind that Mr Eden’s powers of recollection have been shown to be fallible. In his pleaded reply Mr Eden had denied receiving emails attaching schedules of costs on a regular basis from Joe Oliver (and later David Stanford) until confronted with documentary evidence that he had not only received them but had replied to many of them, something for which he had to apologise in his witness statement on the basis that, at the time of his reply, he had had no recollection of having received them, before going on to seek to explain, and to justify, his lack of recollection.[19]In his witness statement Mr Parker had accepted that he might not be the easiest of individuals to get on with but he had added that Mr Eden had known his personality and character exactly and that each of them had known the other’s “idiosyncrasies”. In cross-examination Mr Parker recognised that he was “perhaps difficult to work for”, as was confirmed not only by former employees called to give evidence by Mr Eden but also by Mr Parker’s former book-keeper, Joe Oliver, who was called as a witness by Mr Parker. Indeed in his unchallenged witness statement, Mr David Stanford, one of Mr Parker’s witnesses, described Mr Parker as “very short tempered”, with “a limited attention span” and “little indication of people skills”; and this was borne out by my observation of Mr Parker both in the witness box and in the courtroom. Even Mrs Parker described her husband as “a very complex personality” who was “often regarded as a difficult person, sometimes with justification, by people who do not know him well or with whom he is not close. He can have difficulty getting on with people, being impatient and short-tempered, so that he is often falling out with staff or other people he works with. This is important because it is all the more reason Barry valued his friendship with Jack… ”. Mr Connolly submitted that Mr Parker’s evidence was grossly unsatisfactory and that the manner in which he had given his evidence, and its content, reflected criticisms previously levelled against him by His Honour Judge Maddocks in the earlier case of Parker v Synder (as recorded by the Court of Appeal when refusing Mr Parker’s application for permission to appealat [2005] EWCA Civ 1416 at paragraph 14):
“Mr Parker was an erratic and unreliable witness. His suspicious nature led him to describe as fact that which he imagined to have occurred. His evidence would be adjusted to meet the case he wished to pursue…”
Mr Connolly submitted that, if anything, those observations amounted to an understatement, that the court should treat Mr Parker’s evidence with great scepticism, and that where the court had to choose between his evidence and that of Mr Eden, it should prefer the latter. When Mr Parker was asked in cross-examination about Judge Maddocks’s assessment of him he acknowledged that he had given poor evidence for which he had not been properly equipped but that that did not make him a fraudster:
“I may be unreliable but I’m not telling lies.”
[20]I find that Mr Parker was a disastrous witness for his defence. I fear that His Honour Judge Maddocks may have been too kind in his assessment of Mr Parker as a witness. He is probably the most difficult and opinionated witness I have ever had the misfortune to encounter from the bench. He was aggressive, combative and completely unwilling to engage with the questions that were put to him, having (in Mr McEwan’s words) “a colourful temperament” and providing a “generally unfocussed and emotive response to questioning”. Mr Parker was forthright in his rejection of opposing counsel’s propositions. He did himself no favours in the manner of his evidence, which was hardly calculated to engender any sympathy from the court. His stock answers were “Rubbish!” and (less frequently) “Garbage!”. He was prepared to throw allegations of dishonesty around like confetti at a wedding. Mr Parker’s frequent digressions in the witness box demonstrated a serious lack of rigour and focus, and an inability to concentrate on issues, even in the formal forensic atmosphere of the court room. I can well understand that Mr Parker’s legal representatives may not always have been able to follow his evidence and to understand his instructions. In a less formal business environment, and even more so in a social context, I recognise that Mr Parker may not always focus upon what is being said and respond appropriately. In his opening skeleton, and in his written and oral closings, Mr Connolly rightly exposed the many omissions from Mr Parker’s witness statement and the many inconsistencies, both in his written and his oral evidence, and between that evidence and the contemporary documents. I do not propose to identify them individually in this judgment; but having re-read Mr Connolly’s written closing and my notes of that closing, and also of Mr Parker’s evidence, I have no hesitation in finding that Mr Parker is a thoroughly unreliable witness who was prepared to say anything which he thought might support his defence. An example is the wholly unsatisfactory explanation of Mr Parker’s response to the assertion (in paragraph 6 of Eden & Co’s letter before action to Mr Parker of 26 February 2015) that in the course of the site visit Mr Parker had “told Mr Eden and his son that [he] knew the site and the buildings thereon very well and [he] provide[d] a detailed explanation of the proposed refurbishment scheme”. Writing on Mr Parker’s behalf on 15 April 2015, his then solicitors, Lopian Wagner, said (at paragraph 8) that Mr Parker denied any assertion that he had informed “those present” that he knew the houses well. When it was put to Mr Parker in cross-examination that this was an implied acceptance that James Eden had been present at the site view, Mr Parker’s response was to say that this was a reference to Stacey Leonard and Joe Oliver, who had been present at Mr Parker’s offices at the start of the site view, and not to James Eden. I agree with Mr Connolly that this was “patent nonsense” and should have been known to be such by Mr Parker. I do not accept Mr Parker’s explanations that certain matters were considered to be irrelevant to his defence, and so had been omitted from his witness statement, and that his memory had been triggered by the forensic process and by Mr Connolly’s questioning. I find that I cannot accept any of Mr Parker’s evidence in the face of evidence to the contrary which I find to be reliable.[21]On the whole, Mr Eden has given evidence that has been largely consistent and which is supported by other witnesses but his powers of recollection have been shown to be fallible and I am troubled by a number of aspects of the claimant’s evidence and case. I begin by addressing the internal inspection representation.

The internal inspection representation

[22]First, I am satisfied from the photographic evidence, from Mr Parker’s unchallenged evidence, and from the evidence of Mr Dawson that it was not possible for Mr Parker to have secured access to view the interior of the Howe Street properties prior to completion of the purchase by the LLP, at least without the assistance of a third party such as a builder who could break into the properties (of which there was no suggestion). It follows that the alleged internal inspection representation, if it was made, must have been a deliberate lie on the part of Mr Parker. Based upon my observations of Mr Parker over 10 hours in the witness-box, whilst I am able to accept (and I will find) that Mr Parker has been prepared to tell lies in the witness box in order to bolster what he maintains is a genuine defence to this claim, I am reluctant to accept that he would have told such a deliberate untruth to a man who was then a good friend of long standing.[23]Secondly, and most importantly, the internal inspection allegation is not consistent with the pre-action correspondence and with the case as originally pleaded in the particulars of claim. I cannot accept Mr Eden’s assertion that this was “an oversight”. When addressing the site visit at paragraph 6 of his letter before action dated 26 February 2015, no reference was made to the internal inspection representation. The letter in response from Lopian Wagner dated 15 April 2015 stated in terms (at paragraphs 6.2 and 8) that Mr Parker had not viewed the interior of each of the houses at the time and that the parties had been unable to undertake an internal inspection due to the fact that access was unavailable at the time of the site view. Commenting upon that letter in an email to Mr Veeder of 17 April 2015 Mr Eden said that Barry was “all over the place” and that it was “important that I get my facts correct”. Yet when Eden & Co produced their substantive response on 10 June 2015, whilst express reference was made to paragraphs 6.2 and “the assertion of impossibility made in paragraph 8 of your letter” there is no mention of the internal inspection representation. Nor is this mentioned in the particulars of claim. It appears for the first time in paragraph 7 of the reply, when the lack of any internal access to or examination of the properties had been pleaded in paragraphs 11 and 14 of Mr Parker’s defence. I accept Mr McEwan’s submission that it is inconceivable that a lawyer like Mr Eden would have failed to mention, and indeed strongly emphasise, that Mr Parker had inspected the properties and had commented on their condition in advancing Mr Eden’s claim, not necessarily by way of a discrete allegation of misrepresentation, but in giving more credence to Mr Eden’s case that the alleged financial cap had been taken seriously. As Mr McEwan also submits, it is telling that neither Mr Eden nor James say that they had made any further inquiry of Mr Parker after this bare statement of fact. It would surely have been the most natural reaction in conversation, particularly on a visit to the site itself, to have asked how many houses Mr Parker had been in, whether he had been upstairs, what was the extent of the fire damage and so forth. Yet both Mr Eden and James confirmed in cross examination that they had made no comment in response. At the Pre-Trial Review on 30 September 2016 the explanation provided by Mr Connolly (in his reply) for the lateness of the application to amend the particulars of claim to add the internal inspection representation had been that Mr Eden had been unaware that Mr Parker would assert that he had not been inside the properties; but that explanation cannot stand with the pre-action correspondence (as Mr Eden was constrained to accept in cross-examination). Although the internal inspection representation is mentioned in Mr Eden’s witness statement, Mr Eden does not state that he placed any reliance upon it, the emphasis being entirely focussed upon the alleged financial guarantee. Evidence of reliance on the internal inspection representation was only elicited from Mr Eden by Mr Connolly in chief.[24]Thirdly, the physical state of the Howe Street properties at the time of the site visit militates against both the making of the alleged internal inspection representation and any credence being placed upon it, at least without further inquiry from Mr Eden and James as to how Mr Parker had obtained access to the properties, and as to why, if Mr Parker had been able to view the interior of the properties, they could not do so, particularly as the selling agents’ particulars stated that viewing was available by prior appointment. The premises were clearly boarded up with wood over the windows and, as confirmed by Mr Dawson and visible on the photographs, with steel over the doors. Mr Dawson said there were not necessarily padlocks. There was in addition a certain level of security fencing (in the form of Herras panels) which Mr Parker had the offer of retaining after completion of the purchase. There is reference in a post-completion email of 7 October 2009 to the scaffolding on the building having been erected at the insistence of the local authority building officer because he deemed the building to be unsafe[25]Fourthly (and admittedly a minor point), I am satisfied that Mr Eden is mistaken in his recollection that Mr Parker had told him that he had seen the architects’ earlier plans. As previously stated, I am satisfied that Mr Parker had not done so; and I consider it unlikely that Mr Parker would have lied about this because there was an obvious risk that Mr Eden would ask to see the plans in order to form a better view of the existing layout and potential of the properties even though they were for an entirely different scheme to convert the properties into flats.[26]For these reasons, I conclude, on the balance of probabilities, that the internal inspection representation was never made by Mr Parker. Had I been satisfied that it had been made, then for the second of my reasons I would have concluded that Mr Eden had placed no material reliance upon it independently of the alleged financial guarantee. Certainly I am satisfied that the claimant (on whom the burden lies) has not made out his case that the internal inspection representation was made. In making these findings I should make it clear that I am not thereby concluding that Mr Eden was deliberately lying in his evidence about the internal inspection representation. Consistently with the general tenor of his evidence, I am satisfied that Mr Eden cannot understand how Mr Parker could have made any representation as to the cost of the renovation works without having viewed the interior of the properties. Knowing that no internal inspection had taken place on the sole occasion when Mr Eden viewed the properties with Mr Parker (as is common ground), the likelihood is that Mr Eden has convinced himself that Mr Parker must have told him that he had been inside the properties. During the course of his 6 hours in the witness box, and viewed against the documents in the case, I conclude that whilst Mr Eden was doing his best to assist the court, he was also (and understandably) seeking to advance his own case, and that the tensions thereby produced could and did, albeit unconsciously, lead him to recount matters which had not in fact been said but which he now genuinely believes to be true. I consider it likely that Mr Eden’s false recollection has also influenced, and infected, the recollection of his son James.

The representation as to the cost of renovating the Howe Street properties

[27]I turn then to the alleged representation as to the cost of renovating the Howe Street properties. Mr McEwan argues that the fundamental notion of a £560,000 estimate, based upon £80,000 for each of seven properties, falls away because there were understood to be only six properties rather than seven until after completion. He relies, in addition to the evidence of Mr Parker, upon the estate agents’ particulars, the description in the sale contract, an email from Mr Eden to the selling agents dated 7 August 2009 which refers (both in the heading and in the body of the email) to the purchase of “6 houses”, the evidence of Mr Dawson, and the evidence of Mr Smith that Mr Parker gave him no specific instruction as to the number of houses that were to be created nor did he indicate that he had any knowledge of a seventh house. Mr McEwan’s submissions are summarised at paragraphs 13 to 20 of his written closing. Mr Connolly points out that the evidence of Mr Dawson does not fit the chronology because his evidence is to the effect that he discovered the seventh house in mid-November whereas I am satisfied, on the evidence of the architects’ drawings, the date of the invoices for them, and the date of their payment, that the potential seventh house had been discovered about at least a month earlier. Mr Connolly also relies upon the fact that the notion that there were originally understood to be only six houses first surfaced in paragraph 9 of the amended defence as recently as 13 October 2016. Before that Mr Parker’s “clear recollection”, and also his whole case, had been consistent only with there having always been an understanding that the proposed development would encompass seven houses. I am satisfied that Mr Parker had no plausible explanation for this recent change in the “clear recollection” he had entertained for the previous seven years.[28]I am entirely satisfied that Mr Parker was not telling the truth when he said that both men had originally proceeded on the basis of six, rather than seven, properties. I accept Mr Eden’s explanation for the description of 6 houses in his email that he was merely following the agents’ sales particulars and did not wish to alert the selling agents to the properties’ greater potential in case they sought to raise the selling price. Having viewed the properties, albeit in their present state, from the outside, I have no doubt that an experienced property investor and renovator like Mr Parker, who was familiar with the properties (because they were only about 150 yards away from his offices and opposite a house which he had owned for many years), would have appreciated the potential for the conversion of 313 Great Clowes Street into two separate houses. I cannot accept Mr Parker’s evidence to the contrary. I reject Mr McEwan’s submission that both Mr Parker and Mr Eden had simply forgotten that before completion they had been looking at only six houses. Lopian Wagner’s letter of 15 April 2015 had acknowledged as correct (at paragraph 6) that Mr Parker had identified a site “which incorporated a row of 7 derelict terrace houses”. Consistently with this, paragraphs 8 and 9 of Mr Parker’s originally pleaded defence had stated, as his “clear recollection”, that his initial appraisal had been that the Howe Street properties were “ripe for development to produce seven individual houses for sale”. Rather than Mr Eden’s mistake betraying the lie in his case about a £560,000 cap, I find that Mr Parker has opportunistically, and belatedly, seized upon the original description of six houses to bolster his defence. I therefore find no support in this point for Mr Parker’s defence. Nor did my site visit assist me in reaching any firm view about the plausibility of James Eden’s account of his visit to the site with his father and Mr Parker, as Mr McEwan rightly recognised in his written closing.[29]At paragraph 7 of his written closing Mr McEwan addressed the evidence of the four witnesses who purported to corroborate Mr Eden’s evidence that he had been given a financial guarantee by Mr Parker in the form of a £560,000 cap on the cost of the renovation works. I did not find either James Eden or Victoria Whitehurst to be impressive witnesses. James was the only witness who claimed to be present when any cap on the cost of the renovation works was allegedly mentioned and the guarantee was allegedly given. I found him to be concerned to speak from his witness statement rather than from his own recollection. As previously mentioned, I consider that James’s evidence is highly susceptible to influence, however innocent and well-intentioned, from the evidence of his father. Victoria Whitehurst, perhaps because of her deafness and consequent difficulty in articulating clearly, was entirely dependent upon her witness statement for her recollection of the matters spoken to at paragraph 8. In any event, her knowledge of the alleged limit on the cost of the renovation works was derived entirely from Mr Eden and not from Mr Parker. If Mr Eden was under a misapprehension, then so was Miss Whitehurst.[30]Mr Veeder gave evidence that in May 2012 Mr Parker had acknowledged his guarantee that the costs should be under £560,000 and that he was liable under it. Mr McEwan criticises Mr Veeder for not having explained in his witness statement precisely how he had first heard of the guarantee from Mr Eden and for the use in cross-examination of language suggestive of reconstruction rather than recollection. He also suggests a partiality towards Mr Eden; and he questions why Mr Parker should have been so accommodating as to have conceded a liability. Mr Veeder was an impressive witness whose evidence I cannot discount and must weigh in the balance. Based upon my assessment of Mr Parker, however, even if I accept Mr Veeder’s evidence (as I do), I find that I cannot attach great weight to the admission said to have been made by Mr Parker to Mr Veeder.[31]I accept Mr Greenwood’s evidence, supported by that of Mr Eden, as to what took place at the lunch meeting at the Kabana restaurant or café in Manchester on 11 February 2014. I reject Mr Parker’s account of the meeting as pure, and recent, invention. However I consider that little weight can be attached to Mr Parker’s admission at this meeting. It was a social occasion involving no more than light-hearted banter and there was no suggestion that Mr Parker owed Mr Eden any money as a result of the “guarantee”. From Mr Parker’s perspective, the conversation is consistent with him simply acknowledging that he had given an estimate which he had got wrong.[32]I have already found Mr Parker to be a thoroughly unreliable witness who would be prepared to say anything, even in court proceedings, in support of a defence which he believes to be justified. Whilst Mr Eden is a respected solicitor who gave consistent evidence clearly and confidently, I have already indicated why I consider him to be mistaken in his recollection that Mr Parker had told him that he had seen the architects’ plans and also about the internal inspection representation. Against that background, I accept Mr McEwan’s submission that it is pertinent to judge the likelihood of the guarantee having been given to Mr Eden and, just as importantly, reasonably relied upon by him, by reference to surrounding and subsequent facts and events about which the court may find itself on surer ground. Mr McEwan proceeded to identify these at paragraph 10 of his written closing submissions. I can summarise them as follows: (1). One look at the Manchester Evening News photograph (apparently dating from 19 September 2008) of the properties at the junction of Great Clowes Street and Howe Street (at D3/288.1) would confirm that no reasonable person would have placed any reliance upon any non-professional cost estimate whoever had proffered it; and Mr Eden was plainly a very intelligent and commercially astute man. Even if that was all the parties had observed, and the roof damage had been perceived as being limited to the Great Clowes Street property (as Mr Smith and Mr Mancini both intimated when invited to address the photograph), it was still sufficiently alarming to put any reasonable observer on notice that no sensible weight should be attached to any attempt by Mr Parker to estimate cost however well intentioned it might have been. (2). For all his experience and success as a property owner and investor, Mr Parker was a mere layman in this exercise, which plainly required the input of both a professional surveyor and a structural engineer to evaluate the renovation costs before any accurate assessment could be reached. (3). If a man as experienced and intelligent as Mr Eden had been bothered about the costs going into the project, he would have required professional assessments before exchange of contracts; yet it was clear that the plans, drawings and specifications for the eventual development had not been commenced until after completion of the acquisition in mid-September 2009, and the structural engineers’ plans had been even later. (4). There was no reason why Mr Parker should have exposed himself to the responsibility and risk of committing himself to renovation costs for each house capped at £80,000 without having even been inside the properties and when it must have been apparent that the eventual cost of the project could plainly not be foreseen at the time of his discussions with Mr Eden. (5). Mr Parker was described by Mr Eden as a self-made multi-millionaire who plainly had the property base to obtain serious credit if required, as was evidenced by a £1 million loan which he apparently took out in January 2010, paying a £12,000 arrangement fee. Mr Parker could not even remember what this was for. Mr Parker had had no motive to mislead, still less to defraud, his good friend of many years by luring him into a high-risk venture which, on Mr Eden’s fraud case, Mr Parker had foreseen would run into sizeable difficulty, endangering their friendship and potentially landing Mr Parker with an embarrassing liability. Mr Connolly suggested that the explanation was that Mr Parker was always short of ready cash; that he knew that Mr Eden was generous with his money, and was a regular lender on unsecured terms to Mr Parker, who liked “to look after his friends”; that Mr Parker wanted to acquire the Howe Street properties and knew that on his recommendation Mr Eden would invest; and that Mr Parker believed that once Mr Eden was tied in to the project, Mr Parker’s guarantee would fall by the way side, either because it would be forgotten about, or because the return would be so healthy, or because Mr Parker would be able to charm his soft and generous friend on the promise of putting it right on “the next deal”. In short, and as Mr Eden said in his evidence, Mr Parker had seen him as a “soft touch” and a far better proposition than the alternative which would have incurred high bridging interest rates from other available sources of finance and the provision of security. Having seen Mr Parker’s performance in the witness box, however, I find it difficult to attribute such Machiavellian thinking to Mr Parker. (6). The memorandum of terms prepared by Mr Eden, an experienced and established solicitor with what Mr McEwan described as “a string of Masters’ degrees”, and signed by Mr Parker on 16th December 2009 made no mention of the £80,000 guarantee or £560,000 cap at all. The document is headed unequivocally:
“Agreement for the Finance, Fees, Refurbishment and Other Costs Associated with the Acquisition and Development of 2-10 Howe Street and 313 Great Clowes Street”
I attach considerable weight to the omission of any reference to the financial guarantee in this memorandum, which was drafted by Mr Eden specifically to address (amongst other things) the refurbishment and other costs associated with the development of the Howe Street properties. Mr Connolly emphasised Mr Eden’s evidence that the renovation costs had not then begun to approach the cap and that this was not an arms’ length transaction between two commercial entities but rather a deal with a friend to whom Mr Eden had lent money on an unsecured basis on many previous occasions and that a full contract would have taken many pages. However, I reject Mr Connolly’s submission that, when weighed against the general unreliability of Mr Parker’s evidence, the court should accept Mr Eden’s explanation for this omission. By December 2009, and on the basis of Mr Dawson’s evidence (particularly if his chronology should be advanced in time, as Mr Connolly plausibly suggests it must), it must have become apparent to Mr Eden that the works might well be more extensive than originally envisaged because of the poor condition of the properties; and Mr Eden’s whole purpose in producing this memorandum was to record the important elements of the joint venture for the protection of his family. In my judgment, this written “agreement” indicates that Mr Eden had not viewed Mr Parker’s costs estimate in the light of a financial guarantee, and he had placed no material reliance upon it when deciding to invest in the Howe Street properties project. (7). The first written reference to any cap from Mr Eden, a prolific sender of emails, was not until 26February 2014, and even then he merely commented that, on looking through the invoices and papers, it looked like the houses had cost a lot more than £80,000 each. In his subsequent references to £80,000 Mr Eden does not mention any guarantee or promise or suggest any potential liability resulting from its excess. He merely uses the expression the figure “you told me” and similar phrases. (8). When the cap was reached in June 2010 there was no written communication of that fact nor any written record of the alleged discussion with Mr Parker described by Mr Eden, and corroborated (in what are said by Mr McEwan to be stilted, formal terms, resembling an extract from Mr Eden’s pleaded case) in the statement of Miss Whitehurst at paragraph 13. Instead, Mr Eden tamely accepted Mr Parker’s lack of funds and made no inquiry as to how much more the renovation works would cost or how long they would take, merely continuing to respond to regular email requests for further funding and schedules of expenditure from Joe Oliver (and later David Stanford) until he had spent over a million pounds. If the cap had been of such pivotal importance, Mr Eden might have been expected to have raised some further inquiries and concerns about the escalating cost well before the sum exceeded £900,000 in December 2010 When the expenditure ceased in March 2011, after having reached £1,010,000, there was again no evidence, written or otherwise, of any remark, notice, communication or reaction to the £560,000 cap having been exceeded from an experienced practising solicitor who now places such fundamental importance and reliance upon it. (9). The friendship between the two men and their families continued unabated throughout 2011 and 2012, as did the business association between the two friends, with Mr Eden even sounding Mr Parker out about a project involving his own 34 Oxford Street offices with Pret a Manger, thereby “picking his brains”. (10). When Mr Eden wrote his first formal letter on 30 May 2013 reflecting his growing concern about the lack of information and specifically requesting a final, definitive and up-to-date account of the build costs and rental income for the Howe Street properties, he made no reference to the £560,000 cap or the guarantee whatsoever. I am satisfied from Mr Eden’s evidence that it was this dispute over the lack of financial information, and Mr Eden’s perception, fuelled by concerns raised by Mr Veeder, that Mr Parker had been misappropriating moneys that belonged to the LLP and Mr Eden, and wrongly charging his son Ryan’s wages to the joint venture, that initially fuelled the present dispute, rather than Mr Eden’s concern that Mr Parker had expended moneys in excess, and in breach, of a financial guarantee. In cross-examination Mr Eden explained that it was when he found out that Mr Parker had been misappropriating money from him – stealing from him – that his attitude had changed and hardened. (11). When asked why he had not made any fuss about having had to spend £450,000 over the estimate, Mr Eden replied that it was effectively only £225,000 each and that that was small money to a man of his wealth and with his business interests: it was not a lot of money and he felt comfortable about it. Mr McEwan submitted that such a man would not be bothered about obtaining a fixed guarantee as to the cost of this project nor would he be influenced by it in entering into the transaction. He had not even bothered to scrutinise the schedules of costs he had been receiving by email on a regular basis from Joe Oliver (and later David Stanford) or to pass them on to Miss Whitehurst. Indeed, as previously mentioned, at paragraphs 44 to 46 of his witness statement, Mr Eden had had to apologise for having denied in his reply that he had received those emails and schedules on the basis that, at the time of his reply, he had had no recollection of having received them and he had sought to explain, and to justify, his lack of recollection. Mr Eden’s whole pattern of behaviour was said to be consistent with that of a very wealthy man who was simply not concerned enough about what the project would cost to place any reliance upon any estimate given by his old friend, whether it was as casual as Mr Parker says or was something more formal and considered as a well-intentioned attempt to forecast the cost. It appeared that there had been no discussion of what profit the parties had had in mind and there was therefore no reason why the figure of £560,000 should have had any real significance to Mr Eden in the commercial sense. Mr Eden explained in evidence that he had not complained or raised the issue with Mr Parker on or after completion of the development because he had not been that bothered and because Mr Parker was his friend.[33]Bearing the foregoing factors in mind, I am satisfied that Mr Eden has not made out his case that Mr Parker represented, still less warranted, that the renovation costs would not exceed £80,000 per house or £560,000 in total. Nor has Mr Eden satisfied me that he relied upon any such representation or representations even if I had found that they had been made. Because I cannot accept Mr Parker’s evidence as reliable, I find that the course of the negotiations proceeded in the manner stated by Mr Eden and James in evidence. In particular, I accept that James was present at the site visit and that he adjourned with his father and Mr Parker for coffee at the Fort Retail Park, where further discussions about the joint venture took place. I find that the discussions largely took the form related by Mr Eden and by James. However, I find that both Mr Eden and his son James have mistakenly elevated what was never any more than a rough estimate of the costs of renovation into a costs cap and a guarantee. I cannot accept that Mr Parker would have been so foolish as to have made such a binding representation or given such a guarantee. In the light of the subsequent documentation and course of dealing between the parties (as summarised above), I cannot accept that Mr Eden ever thought at the time that such a binding representation or guarantee had ever been made or given or that he ever relied upon it in entering into the joint venture. I am satisfied that although (as I find) Mr Parker has deliberately lied in support of his defence, it is because his defence is a genuine one. When he was being cross-examined about the £80,000 cap on the morning of Day 4, I detected genuine indignation in Mr Parker’s repeated assertion that this was a lie and was just “rubbish” and in his query: what was the specification? I found there to be genuine conviction in Mr Parker’s denials. I am prepared to accept that Mr Eden has convinced himself of the truth of his evidence and case, and that his conviction has translated itself to James. But I am satisfied that they are both mistaken about the quality and effect of what was no more than a broad and rough estimate of costs. Whilst I am prepared to accept that Mr Eden may now genuinely believe what he has said on the issue of reliance at paragraph 32 of his witness statement, I reject that evidence. Mr Eden’s assertions that he was concerned to have certainty of cost is not supported by his conduct in accepting what Mr Parker was telling him without further inquiry as to the extent of the necessary works, when viewed against the apparent condition of the properties and the details of the scheme, and without seeking any professional input; nor is it consistent with the way in which Mr Eden proceeded to fund the works, without reference to Joe Oliver’s spreadsheets, and, even more significantly, without any further inquiry as to the amount or timescale of the likely further expenditure, or any checks as to the sums already expended, when the alleged cap of £560,000 was reached and passed in June 2010. When the works were complete, and the Howe Street properties had been let and became income-producing, there was no request for the repayment of Mr Eden’s excess expenditure on the works of renovation. Whilst I broadly accept Mr Eden’s account of his lunch meeting at Croma restaurant, I do not accept that Mr Parker understood that he was acknowledging the existence of any contractual cap on Mr Eden’s liability for the costs of the renovation works or that he was thereby acknowledging any liability to bear the excess costs himself. Had it been necessary for me to decide the point, I would have accepted Mr Eden’s evidence and case that by continuing to fund the development, Mr Eden had been acting reasonably so as to mitigate his loss given the stage the works had reached and in the absence of any offer by Mr Parker to bear the further costs personally.[34]In closing both counsel proceeded before me on the footing that this was a case where there was little scope for one or other party to be mistaken. During the course of Mr McEwan’s oral closing, I pointed out that, on that footing, both Mr Parker and Mr Eden must know where the truth lay, and one of them must know that it did not lie with him so that it would be sensible for him to seek to settle the litigation. Neither side has sought to do so. I regard that as some slight indication (but not evidence) that both parties may genuinely believe that they have been telling the truth about the ultimate issue in this litigation.

Interest and other matters in issue on the Part 7 claim

[35]On a separate area of dispute, I should record that I expressly reject Mr Parker’s assertion that there was ever any agreement that Mr Eden was to forego interest on the sum of over £1.3 million which he had advanced to the LLP for the purchase and renovation of the Howe Street properties in return for Mr Parker undertaking their management free of charge. Any such agreement (which was denied by Mr Eden) is entirely inconsistent with the documentation, and in my judgment Mr Parker was wholly incapable of satisfactorily explaining away the inconsistencies. Although Mr Parker spoke at some length on this topic, Mr McEwan rightly recognised that he did so “not always intelligibly or helpfully”.[36]Given Mr Parker’s acceptance that he should pay off the current balance owing in respect of Mount Pleasant, the foregoing is strictly enough to dispose of the Part 7 claim; and I do not propose to take up much time dealing with matters which are not necessary for my decision. Had I found the internal inspection representation proved, then clearly it would have been made fraudulently because on his own evidence and case (which in this respect I accept) Mr Parker had not been inside the Howe Street properties. Had I found the representations about an upper limit of £80,000 for the cost of renovating each house proved, I would have held that they had been made unreasonably. It would have been unreasonable, and indeed reckless, for Mr Parker to have ventured any firm opinion as to the maximum cost of renovating the properties without having inspected their interior and ascertained the extent of the fire and water damage and their state of disrepair, and also without having any particular works specification in mind. Indeed, Mr Parker seemed to me clearly to recognise, and to rely upon, this in his evidence, accepting that it would have been impossible for him to have put an accurate and certain figure of £80,000 per house on the renovation works when he had not inspected the interior and did not have any works specification. The only reliable evidence as to the condition of the properties is contained in paragraph 5 of Mr Dawson’s witness statement. There is also the evidence of the Manchester Evening News photograph, but that had been taken in September 2008 and I am satisfied that the condition of the properties had deteriorated further since then, with possible further fire damage and certainly damage from water penetration. I am satisfied, from the photographs taken by Mr Rigby that were handed in during the afternoon that the quantity surveyors gave their evidence, that (consistently with Mr Rigby’s evidence) at least part of the roofs of the Howe Street properties was visible from the public highway. On the balance of probabilities, I find that there had been no protection from water penetration provided since the fire in September 2008. There was no suggestion of this in the evidence - indeed the evidence of both Mr Dawson and Mr Smith indicates that the properties had been left exposed to the elements - and it is consistent with the fact that the owner and seller of the Howe Street properties was a company in administration (a point made by Mr Rigby in the course of his oral evidence). On the basis of Mr Dawson’s evidence as to the condition of the properties, I am satisfied that the effect of the evidence of both expert quantity surveyors is that £80,000 per house could not have been a reasonable preliminary estimate of the cost of renovation. In addition, and irrespective of the true extent of the fire damage, the evidence of both expert quantity surveyors was that the additional costs of converting the properties from flats into houses would, in any event, have rendered the £80,000 estimate unachievable and thus unreasonable (as Mr McEwan was constrained to accept in closing). Lopian Wagner’s letter of 15 April 2015 asserted (in paragraph 8) that at the time of the site visit Messrs Parker and Eden had anticipated that the renovation of the Howe Street properties “would include converting each house from flats into a single occupancy home”. The agents’ sales particulars stated that it was the agents’ understanding that the terrace had an existing planning consent for 31 residential units and recommended that interested parties should make their own enquiries of Salford City Council. The solicitors who acted on the purchase of the properties (Lawson Coppock & Hart) reported (by email to Mr Eden and Mr Parker of 4 September 2009) that there was a planning permission dated 17 August 1983 relating to the original conversion of the buildings into 32 self-contained flats; and Mr Smith confirmed (at paragraph 12.5 of his witness statement) that the buildings “were all previously flats”. Any estimate of the costs of renovation should therefore also have factored this into account.[37]On the issue of the value of the Howe Street properties, as Mr McEwan recognised in his written closing, relevant comparables were thin on the ground and the relevant market is difficult to evaluate. Although Mr McEwan criticised the claimant’s valuer, Mr Kreike, for taking the most conservative line available, my assessment was that his approach was more carefully considered and thorough, and more analytical, than that of the defendant’s valuer, Mr McKee, who seemed to me to place overdue reliance upon the sale of 16 Howe Street in November 2010 for £360,000 given that (according to the Zoopla web-site) the same house was placed on the market on 2 April 2015 for only £249,995. Absent any explanation for this anomalous, and significant, fall in the perceived market value of this property in what was accepted to be a rising market, I can only accept Mr Kreike’s description of this comparable as “very much of an outlier compared to other house sales in the area at the time”. It also seems to me(1) that Mr McKee attached insufficient weight to the sale of 3 Howe Street in December 2015 and its implications for his earlier 2011/2 valuations and(2) that his valuations failed to account sufficiently for the increase in property values in the market between 2011/2 and 2016. On the evidence I acknowledge that Mr Kreike’s valuations may be slightly on the low side but I am satisfied that Mr McKee’s are too high. Doing the best I can, I would value each of the properties in Howe Street (1) in 2011/2 in the order of £225,000 and (2) in 2016 in the order of £300,000, with reductions of 10% for 313A and 20% for 313 Great Clowes Street.

The petition

[38]Finally I turn to the petition. Mr Connolly submitted that this could be dealt with relatively shortly for two reasons: First, because Mr Parker consents to an order for an account to be taken before a District Judge as to whether the missing invoices, apparently unrelated invoices, credit card payments and petty cash payments relate to the refurbishment of the Howe Street properties, with the costs of taking the account (including the costs incurred to date by experts on this issue) to be determined once the account had been taken. Secondly, because Mr Parker is said to have made a number of admissions as to his liability to account to the LLP in relation to other heads of claim.[39]Mr McEwan invited the court to express a conclusion on the allegation that Mr Parker had deliberately misapplied and diverted substantial (or indeed any) moneys provided by Mr Eden for the purpose of the renovation works. It was said that this would inform and assist the process of taking any account and might very much simplify matters for those dealing with it. Whilst I recognise that the determination of this issue may be affected by the taking of the account, since this will be undertaken by a district judge, and I have had the advantage – if that is the correct word - of hearing Mr Eden and Mr Parker over many hours in the witness box, it seems to me that justice to both parties dictates that I should record the conclusion at which I have arrived on this allegation.[40]Mr McEwan submitted that Mr Oliver (and later Mr Stanford) had kept Mr Eden regularly informed of the expenditure, with fully detailed schedules containing reference to the minutest of items.He said that it was clear from the evidence of Mr Oliver and Miss Leonard that Mr Parker (who himself said he was interested in the pricing but not in the paperwork) had taken no interest in the purchase orders, the preparation of the spreadsheets, or the allocation of the invoices. Mr Connolly had attempted to suggest to Mr Oliver that he must have acted on the instructions of “someone” in relation to a few invoices which perhaps would have required special consideration; but Mr McEwan pointed out that in the case of the hundreds of invoices arriving in the routine progress of the works, it was Miss Leonard and Mr Oliver who had matched them to purchase orders and allocated them to the LLP. Miss Leonard had been very clear about this: Mr Parker had played no part and he had given her no instructions. If mistakes had been made, which was inevitable in an office where invoices were arriving for more than one project, and where suppliers might not have sufficiently identified the relevant project, these had been the innocent errors of honest employees. In the Quantity Surveyors’ Joint Statement the value of the obvious errors was negligible (only some £3,393).It was said to be inconceivable that Mr Oliver and Miss Leonard (and later Mr Stanford) had been party to any dishonest misapplication of moneys, while Mr Parker had clearly played no part in the preparation and updating of the spreadsheets, the purchase orders or the allocation of the invoices. Ordering had been done by Mr Dawson and Ryan Parker. It was perfectly possible that invoices had gone astray, perhaps in large numbers, over the period of the development and in the years since then. Mr McEwan submitted that, consistently with the evidence of Mr Parker, the VAT invoice of 31 October 2011 from Parker Properties to the LLP in the sum of just over £700,000 for labour and materials supplied did not represent the full cost of the works to the Howe Street properties but only the vatable balance after the deduction of non-allowable labour and other costs. In his original particulars of claim (at paragraph 32 (vi)) Mr Eden had relied upon a report from Derek Gough Associates which showed a total minimum renovation cost (net of VAT and contractor’s profit) of almost £976,000; and this was consistent with the view of the two expert quantity surveyors. In cross-examination, Mr Eden had accepted that three professionals had assessed the minimum cost of the works at just a little short of what it had actually cost Mr Eden. Mr McEwan submitted that against that background, it was most unlikely that Mr Parker could have misapplied moneys received from Mr Eden in a sum in the order of £300,000 or any sum remotely approaching that figure: the job could not have been done at such a low level of cost, and Mr Oliver (and later Mr Stanford) and Miss Leonard could not have made that level of mistakes.[41]I accept those submissions. On the present state of the evidence, I am not satisfied that Mr Parker has deliberately misapplied or diverted substantial (or indeed any) moneys provided by Mr Eden for the purpose of the renovation works. The view of Mr Smith, the architect who worked on the project, was that the achieved build cost of £1.13 million “was a good price for the specification delivered given the issues which were encountered” and he could not “see how a better price could have been achieved without cutting corners on the project itself”: see paragraph 18 of his witness statement. Although Mr Eden had understood that Mr Parker was very good at sourcing goods and labour “on the cheap”, and Mr Parker played up the value of his son Ryan’s contribution to saving costs on the development project when giving evidence, I am not satisfied that Mr Parker has appropriated the benefit of any savings to himself. In my judgment, the inclusion of any invoices from other projects in the items charged to Mr Eden was attributable to human error. Likewise, any tenant mismanagement attributable to Mr Parker was down to inefficiency, and matters of professional judgment, and not to any wrongdoing on his part. After all, as an equal joint venture partner with Mr Eden in the LLP, Mr Parker had every reason to seek to maximise rentals and rent recoveries. Mr Eden had left Mr Parker to manage the properties as best he could and Mr Parker was doing so without charging anything to the LLP. In my judgment, Mr Parker is not liable to the LLP simply because he might have done better.[42]I bear in mind that there was no challenge to the reliability or the credibility of either Joe Oliver or Stacey Leonard. Indeed, in cross-examination Mr Connolly made it clear that he was not alleging that Mr Oliver had done anything wrong. The claimant did not require David Stanford, who succeeded to the role of Joe Oliver at or about the end of 2010, to attend for cross-examination. Miss Leonard was an exemplary witness: confident, open, reliable and helpful. She told me that if Mr Parker had wanted to take cash out of the safe, she would make him sign for it. The fact that someone of Miss Leonard’s abilities was prepared to return to work for Mr Parker, and continues to do so, is some indication that he is not altogether a terrible employer. Had there not been a three-year gap in her employment as an accounts assistant with Parker Properties during the period September 2012 to September 2015, it may be that many of the present accounting uncertainties would have been avoided. Equally, had Mr Eden troubled to read the spreadsheets with which Joe Oliver had been providing him on a regular basis and raised any queries at the time (in relation, for example, to Ryan Parker’s wages), the present litigation might have been avoided. It is not only Mr Parker’s poor management techniques and accounting deficiencies that have led to the present unfortunate litigation.[43]I also bear in mind that in his unchallenged witness statement, Mr Stanford described Mr Parker as “certainly not a person who wants to get involved in detail on day to day management issues”. He concluded by saying that he “saw no evidence whatsoever in my time of working with Barry in connection with or during the Howe Street development that he was seeking intentionally to mislead Jack Eden or deprive him of monies properly due to him or the LLP or in any way take advantage of Jack. In fact it seemed that Barry very much valued the friendship and business association he enjoyed with Jack and it would have been wholly at odds with that impression I had for Barry to have been acting in any way to threaten or damage that relationship.” This echoes what was said by Mrs Parker in her witness statement.[44]I turn then to the issues identified by Mr Connolly at paragraphs 118 to 131 of his written closing. I have already held that Mr Eden is entitled to charge and recover interest on his outstanding outlay at the rate of 2.5% p.a. above RBS base rate, compounded with quarterly rests. The admitted outstanding rent of £38,070.93 must be accounted for to the LLP. Miss Leonard thought that the additional amount of £12,444.96 had been paid into the bank account of the LLP rather than that of Parker Properties. If this cannot be resolved between the parties, there will need to be an order for an account. Mr McEwan accepted that whatever sum should be found due should be paid over to the LLP. The email of 27 February 2013 (on the subject of “keeping my wife happy”) in which Mr Eden appeared to indicate that the holding over of rent was “not a problem” did not excuse the continued failure to repay the balance due.[45]In paragraph 30 of the points of defence to the petition Mr Parker stated that he had himself offered, and had always intended, to account in respect of the approximately £10,000 additional cost of furnishings for 8 Howe Street, originally occupied by Ryan Parker. In cross-examination Mr Parker said that he had paid for these items himself or that his “missus” had done so. Certainly Mrs Parker did not back him up on that in her evidence. Unless Mr Parker can produce documentary evidence that he paid for these items, he should account to the LLP for their cost. Mr Parker has admitted a liability to repay the LLP for the rent-free accommodation occupied by his son Ryan at 8 Howe Street for a period of 3 years. Mr Eden’s email of 20 February 2013 stated that they would calculate Ryan’s rent “in due course when we finalise the outstanding matters”. Mr McEwan accepted that if Mr Eden wanted the matter dealt with now, the outstanding rent would be paid into the LLP as soon as the amount was agreed. Mr Parker did not dispute the open market rental value of £1,000 per month for this property so he should account to the LLP for £36,000 under this head forthwith.[46]Mr Connolly maintained that Mr Parker has caused his son Ryan to be paid £20,435.94 by “flipping” his salary from Parker Properties to the LLP for the duration of the renovation works. It was said that that was done without Mr Eden’s knowledge or consent and should have been included in the £600 a week that was paid to Parker Properties and the 50% equity that Mr Parker received as part of the joint venture agreement for no capital investment on his part. Mr Connolly therefore submitted that Mr Parker should account back to the LLP for the entirety of this sum. Mr McEwan submitted that Ryan’s wages were duly notified to Mr Eden throughout the project on the regular schedules submitted by Mr Oliver and Mr Stanford which Mr Eden had not bothered to read. Mr McEwan pointed out that the expert quantity surveyors both agreed that if Ryan had not acted as a site labourer and provided support and general duties to the site manager it was probable that another operative would have done so. They agreed that the rate claimed appeared reasonable. Mr McEwan submitted that Ryan’s work on the renovations was well-evidenced and he had effectively rebutted any attempt to question it. I accept Mr McEwan’s submissions. Miss Leonard confirmed that Ryan had done the running around to get the best prices for materials and that he had just been working for the LLP at that time. The liability to account for Ryan’s wages is not made out.[47]Mr Connolly submitted that Mr Parker’s records showed that he was paid “casual wages” of £2,000 in circumstances where he had had no entitlement to any such payment. In cross examination Mr Parker gave a convoluted account of having bought and re-sold doors and made a false book entry because he could not obtain an invoice for the doors. He suggested that Mr Eden had been complicit in this and that he had received £800 as representing 50% of the net proceeds of the re-sale of the doors. As Mr Connolly pointed out, that had not been put to Mr Eden in cross examination. Had it been, Mr Connolly said that Mr Eden’s answer would have been that beyond organising storage of some doors at Mr Parker’s request, he knew nothing of this convoluted account and had not received 50% of the net proceeds as alleged. Absent Mr Eden being cross examined on the point, Mr Connolly submitted that the book entry must be taken at face value and Mr Parker must account back to the LLP for the sum of £2,000. I accept this submission.[48]Mr Parker had caused the LLP to pay him some £12,000 purportedly for maintenance charges in circumstances where he accepted that the sums had not been vouched. Those payments had been made without Mr Eden’s agreement and unless and until the sum had been satisfactorily vouched Mr Parker should account to the LLP for the whole of the amount of £12,000. Mr McEwan said that the expenditure has been supported with invoices to a value of £8,000 to £9,000. If this issue cannot be resolved by agreement, it will have to form the subject of an account.[49]Mr Connolly submitted that Mr Parker had conceded that going forward the Howe Street properties should be managed by an independent agent. To avoid the necessity to bring the matter back before the court, a formal order to that effect was sought. Mr McEwan observed that it was a shame that because of the mistrust of Mr Eden, the LLP would be subjected to the additional costs of independent agents, especially now that Stacey Leonard was back on the scene, but it seemed that that was the only realistic course as matters had developed.[50]There are a number of modest claims arising from Mr Parker’s past management of the Howe Street properties. Mr Eden did not pursue the difference in rent claims but he did seek relief in relation to the excessive void at 313 Great Clowes Street (£3,400) and for the failure to obtain possession sufficiently promptly (£1,619) making a total of £5,019 for which Mr Parker should account to the LLP. I did not understand Mr McEwan to contest this claim. Mr Parker had paid himself £9,300 towards his costs of defending these proceedings and Mr Connolly said that he must account back to the LLP for that money. Mr McEwan pointed out that Mr Eden had said that he did not mind Mr Parker withdrawing such a modest sum in principle but that he was annoyed that it had been used to pay Mr Parker’s legal fees associated with this litigation. In my judgment, the appropriate way of dealing with this complaint is to debit this amount against Mr Parker’s capital account with the LLP.[51]Since May 2013 Mr Eden has been asking Mr Parker to provide an account of the insurance charges amounting to some £23,361. It is said on behalf of Mr Eden that Mr Parker has been unwilling to do this and, despite the terms of his points of defence (which refer to further copy invoices being awaited from Reich Insurance), he has still failed to provide that account. An account in relation to this sum will be ordered unless the matter can be resolved by agreement.[52]Mr Connolly submitted that as Mr Parker is in a fiduciary position, when accounting back he should also be required to pay interest on a compound basis to ensure that any benefit he has received is stripped away from him. Mr Connolly submitted that 8% p.a. compounded quarterly would be a reasonable rate. Unless Mr Parker can demonstrate that he has been in a position to borrow moneys during the relevant period at a lesser rate of interest, I would accept this submission.[53]It has been agreed that today’s hearing should be limited to the delivery of this judgment, with further argument as to the full terms of my resulting order, and as to costs, being deferred to a later date (unless the parties feel able to deal with all such matters today now that I have delivered my judgment).

Cited in 1 later judgment