“In the light of these considerations [about the unreliability of memory], the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“The only evidence being put forward in response is therefore that of [the first defendant]; clearly the lack of corroborative evidence undermines his case.”
“(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4) If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”
“30. … Wisniewski is not authority for the proposition that there is an obligation to draw an adverse inference where the four principles are engaged. As the first principle adequately makes plain, there is a discretion ie ‘the court is entitled to draw adverse inferences’.” [Emphasis added]
“154. In my judgment the point can be dealt with relatively briefly thus: i) This evidential ‘rule’ is, as I have indicated above, a fairly narrow one. As I have noted previously ([2018] EWHC 1768 (Comm) at [115]), the drawing of such inferences is not something to be lightly undertaken. ii) Where a party relies on it, it is necessary for it to set out clearly (i) the point on which the inference is sought (ii) the reason why it is said that the ‘missing’ witness would have material evidence to give on that issue and (iii) why it is said that the party seeking to have the inference drawn has itself adduced relevant evidence on that issue. iii) The Court then has a discretion and will exercise it not just in the light of those principles, but also in the light of: a) the overriding objective; and b) an understanding that it arises against the background of an evidential world which shifts - both as to burden and as to the development of the case - during trial. [ … ]” i) This evidential ‘rule’ is, as I have indicated above, a fairly narrow one. As I have noted previously ([2018] EWHC 1768 (Comm) at [115]), the drawing of such inferences is not something to be lightly undertaken. ii) Where a party relies on it, it is necessary for it to set out clearly (i) the point on which the inference is sought (ii) the reason why it is said that the ‘missing’ witness would have material evidence to give on that issue and (iii) why it is said that the party seeking to have the inference drawn has itself adduced relevant evidence on that issue. a) the overriding objective; and b) an understanding that it arises against the background of an evidential world which shifts - both as to burden and as to the development of the case - during trial. [ … ]”
“Holdings and its subsidiaries have a number of critical decisions to be taken regarding their future strategy and operations. Historically the group has operated as a housebuilder. The board and shareholders have in the last few years been considering a number of projects, including a significant investment in building and operating a hotel and leisure resort on land it currently owns. This development would require significant funding and is a higher risk than current trading activities. Mrs C De Sena has opposing views to the other shareholders and directors regarding the future investments of the group.”
“17. The Claimants and the Third and Fourth Defendants (collectively) shall each have permission to adduce oral expert evidence from an accountant on the issue of scope and breach of duty so far as the claimant’s case against the Third and Fourth Defendants is concerned…”
“(i) What were the terms of the contractual retainer which BF had with SNHL group of companies (the “Group”)? (ii) Was the Group’s retainer limited to BF’s functions as auditor? (iii) If so, should BF have entered into a further contractual retainer to advise the Group on a demerger? (iv) In order to advise the Group on a demerger would it have been necessary to have the assets of the Group independently valued? (v) What are the circumstances in which BF could act for the Group and also advise the shareholders on a demerger? (vi) In particular, would BF need clear written instructions from each of the shareholders that there was no conflict of interest inter se and that the terms of the demerger had been agreed? (vii) BF’s case is that it was acting for the Group and not the shareholders. If it became apparent to BF (or if BF ought reasonably to have concluded) that there was no agreement between all the shareholders as to the terms of the demerger, should BF have: (a) advised CDS that it could not continue to act for her and that she should be independently advised; and, or (b) ceased to act for any party on the demerger? (viii) would a reasonably competent chartered accountant in the position of DS or AB have considered it necessary to record in writing any suggestion given orally to C1 (none being admitted) firstly as to the conflict of interests and secondly that she should obtain separate accountancy of valuation advice? (ix) do you consider that BF came under a duty of care to CDS or MDL, having regard to the principles set out in the case of BCCI (Overseas) Ltd (in Liquidation) v Price Waterhouse, namely: (a) the precise relationship between the adviser and the advisee; (b) the precise circumstances in which the advice came into existence and in which the advice was communicated to the advisee and whether the communication was made by the adviser or by a third party; (c) the presence or absence of other advisers and the degree of reliance which the adviser intended or should reasonably have anticipated would be placed on its accuracy by the advisee and the reliance in fact placed on it; (d) the presence or absence of other advisers on whom the advisee would or could rely; and (e) the opportunity, if any, given to the advisee to issue a disclaimer. (x) What was the scope of BF’s duty, if so, and when did it arise? (xi) would a reasonably competent firm of chartered accountants in BF’s position have: (a) sent the February and April 2011 clearance letters to HMRC in the circumstances then prevailing; (b) failed to advise CDS that she was not receiving the equivalent of the market value of her shares in SNHL/SNL; (c) drawn up demerger proposal which gave rise to CDS receiving less than she was entitled to for her shareholding in SNHL; (d) applied a minority discount and/or a bulk or portfolio discount to the assets retained by the group and/or those transferred to MDL; (e) applied such a discount without justification or notice to CDS; (f) failed to advise CDS of the fact, reason for and implications of the second capital reduction in MDL; (g) failed to advise CDS of the consequences of MDL being for fiscal purposes an investment rather than a trading company?” (a) advised CDS that it could not continue to act for her and that she should be independently advised; and, or (b) ceased to act for any party on the demerger? (a) the precise relationship between the adviser and the advisee; (b) the precise circumstances in which the advice came into existence and in which the advice was communicated to the advisee and whether the communication was made by the adviser or by a third party; (c) the presence or absence of other advisers and the degree of reliance which the adviser intended or should reasonably have anticipated would be placed on its accuracy by the advisee and the reliance in fact placed on it; (d) the presence or absence of other advisers on whom the advisee would or could rely; and (e) the opportunity, if any, given to the advisee to issue a disclaimer. (a) sent the February and April 2011 clearance letters to HMRC in the circumstances then prevailing; (b) failed to advise CDS that she was not receiving the equivalent of the market value of her shares in SNHL/SNL; (c) drawn up demerger proposal which gave rise to CDS receiving less than she was entitled to for her shareholding in SNHL; (d) applied a minority discount and/or a bulk or portfolio discount to the assets retained by the group and/or those transferred to MDL; (e) applied such a discount without justification or notice to CDS; (f) failed to advise CDS of the fact, reason for and implications of the second capital reduction in MDL; (g) failed to advise CDS of the consequences of MDL being for fiscal purposes an investment rather than a trading company?”
“I have been instructed to prepare an expert report dealing with scope and breach of duty as alleged by the Claimants and in particular: (a) whether BF had a duty to advise MDL and/or CDS personally, and specifically: (i) in circumstances where BF were engaged by SNHL and/or the Notaro Group from whom were BF entitled to take instructions? (ii) Were BF engaged formally to act for CDS personally? (iii) Did BF assume responsibility to advise CDS personally? (iv) Were BF formally engaged to act for MDL? (v) Did BF assume responsibility to advise MDL? (b) Comment upon the following issues that would only be relevant if the Court were to determine that BF owed a personal duty to CDS and/or a duty to MDL (which BF denies): (i) The advice which CDS should have received in relation to the alleged duty to advise her to obtain an independent valuation of assets. In particular, what with the duty of a reasonably competent firm of accountants have been and, in the circumstances of this case, did the actions of BF fall short of that standard? (ii) BF’s duty to advise CDS on the impact of the bulk transfer discount on her and/or MDL. (c) Explain the reasons for the second capital reduction and comment on: (i) What was the reason for the second capital reduction; and (ii) The effect of the second capital reduction on the value of CDS’s shareholding in MDL. (d) Comment on the allegations in relation to the Clearance Letters.” (i) in circumstances where BF were engaged by SNHL and/or the Notaro Group from whom were BF entitled to take instructions? (ii) Were BF engaged formally to act for CDS personally? (iii) Did BF assume responsibility to advise CDS personally? (iv) Were BF formally engaged to act for MDL? (v) Did BF assume responsibility to advise MDL? (i) The advice which CDS should have received in relation to the alleged duty to advise her to obtain an independent valuation of assets. In particular, what with the duty of a reasonably competent firm of accountants have been and, in the circumstances of this case, did the actions of BF fall short of that standard? (ii) BF’s duty to advise CDS on the impact of the bulk transfer discount on her and/or MDL. (i) What was the reason for the second capital reduction; and (ii) The effect of the second capital reduction on the value of CDS’s shareholding in MDL. (d) Comment on the allegations in relation to the Clearance Letters.”
“I apprehend that if one of the parties intends to make a contract on one set of terms, and the other intends to make a contract on another set of terms, or, as it is sometimes expressed, if the parties are not ad idem, there is no contract, unless the circumstances are such as to preclude one of the parties from denying that he has agreed to the terms of the other. The rule of law is that stated in Freeman v. Cooke [(1848) 2 Exch 654, 663]. If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.”
“25. … In Imperial Loan Co Ltd v Stone[1892] 1 QB 599 , the Court of Appeal held that a contract made by a person who lacked the capacity to make it was not void, but could be avoided by that person provided that the other party to the contract knew (or, it is now generally accepted, ought to have known) of his incapacity. As Mr Rowley points out on behalf of the defendant, this rule is consistent with the objective theory of contract, that a party is bound, not by what he actually intended, but by what objectively he was understood to intend.”
“103. Actual undue influence presents no relevant problem. It is an equitable wrong committed by the dominant party against the other which makes it unconscionable for the dominant party to enforce his legal rights against the other. It is typically some express conduct overbearing the other party's will. It is capable of including conduct which might give a defence at law, for example, duress and misrepresentation… Actual undue influence does not depend upon some preexisting relationship between the two parties though it is most commonly associated with and derives from such a relationship. He who alleges actual undue influence must prove it.”
“406. In the present case it is not suggested that the relationship between CPC and Mr Holyoake was either such as to give rise to a presumption of undue influence or was a protected relationship of the kind referred to by Rose J [in Libyan Investment Authority v Goldman Sachs]. The case is solely put as one of actual threats, menaces and coercion. As appears from the citations from both Lord Nicholls and Lord Hobhouse in Etridge, there is in such a case a considerable overlap with the common law doctrine of duress, and indeed Chitty at §8-067 suggests these cases are now probably better viewed as cases of illegitimate pressure (covered by the doctrine of duress).”
“It is impossible to doubt that when a father knows that his son has committed forgery the holder of the forged instrument possesses a power, and exercises an influence over him, which the law considers undue pressure, and therefore will not allow securities obtained from him under such pressure to be enforced against him.”
“The question, therefore, my Lords, is, whether a father appealed to under such circumstances, to take upon himself an amount of civil liability, with the knowledge that, unless he does so, his son will be exposed to a criminal prosecution, with the certainty of conviction, can be regarded as a free and voluntary agent? I have no hesitation in saying that no man is safe, or ought to be safe, who takes a security for the debt of a felon, from the father of the felon, under such circumstances. A contract to give security for the debt of another, which is a contract without consideration, is, above all things, a contract that should be based upon the free and voluntary agency of the individual who enters into it. But it is clear that the power of considering whether he ought to do it or not, whether it is prudent to do it or not, is altogether taken away from a father who is brought into the situation of either refusing, and leaving his son in that perilous condition, or of taking on himself the amount of that civil obligation.”
“A fiduciary relationship does not arise where, because one of the parties to a relationship has wrongly assessed the trustworthiness of another, he has reposed confidence in him which he would not have done had he known the true intentions of that other. In ordinary business affairs persons who have dealings with one another frequently have confidence in each other and sometimes that confidence is misplaced. That does not make the relationship a fiduciary one. A fiduciary relationship exists where one party is in a position of reliance upon the other because of the nature of the relationship and not because of a wrong assessment of character or reliability.”
“The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position.”
“To describe someone as a fiduciary, without more, is meaningless. As Frankfurter J. said in S.E.C. v. Chenery Corporation (1943) 318 U.S. 80, 885-86, cited in Goff and Jones, The Law of Restitution, 4th ed. (1993), p. 644: ‘To say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?’” ‘To say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?’”
“59. There was nothing special in the factual relationship between the directors and the members in this case to give rise to a fiduciary duty of disclosure. In particular there were no relevant dealings, negotiations, communications or other contact directly between the directors and the members; the actions of the directors had not caused the members to retire when they did; and, probably most important of all, prior to March 1998 there was nothing sufficiently concrete and specific, either in existence or in contemplation, for the directors to disclose to the members.”
‘… arguments of a very similar nature prevailed in the judgment of Staughton J in … Howard v Woodman Matthews …where the solicitor knew that the company was a family company effectively run by Mr Witchell from whom they received their instructions. He held at p 121A: “In my judgment, in the circumstances of this case, Mr Witchell as well as the company was the client of Mr Mason. That seems to me to reflect the reality of the situation. Mr Mason knew that Mr Witchell … was the company. He probably knew that Mr Witchell derived his livelihood and some profit from the company, and was vitally concerned in its wellbeing. Mr Witchell had first been his personal friend, and had then come to him in connection with other matters for legal advice, both as the representative of the company and in a personal capacity. When Mr Witchell sought his advice on … [a matter concerning the company] Mr Mason owed a contractual duty of care both to the company and to Mr Witchell”.’
“1. This case powerfully demonstrates the importance of the paramount duty of a solicitor to observe fiduciary obligations in his personal dealings with a client and even with a former client. A solicitor proposing either to buy property from, or to sell property to, a client is under a duty to cause the client to obtain independent advice. That duty may endure beyond the termination of the retainer, which initially formed the professional relationship of solicitor and client : see Snell's Principles of Equity (13th Ed) para 11-83. The source of the duty is not the retainer itself, but all the circumstances (including the retainer) creating a relationship of trust and confidence, from which flow obligations of loyalty and transparency. As long as that confidential relationship exists the solicitor must not place himself in a position where his duty to act in the interests of the confiding party and his personal interest in acting for his own benefit may conflict. Breach of that duty may result in the setting aside of the transaction or, if that is no longer possible, in the award of equitable compensation for resulting loss.” (Emphasis supplied, in order to show the single sentence cited by the claimants.)
“Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.”
“1-09. A claimant must show three things to make out a claim in unjust enrichment: that the defendant was enriched, that his enrichment was gained at the claimant’s expense, and that his enrichment at the claimant’s expense was unjust. If these requirements are satisfied, the further question arises, whether there are any defences to the claim. If there are not, the court must decide what remedy should be awarded. An additional consideration is that some overriding legal principle may justify the defendant’s enrichment and thereby nullify the claimant’s right to restitution.”
“Having considered these approaches and many of the authorities to which we were referred in the course of argument I shall now attempt a summary of the guidance which I have been able to extract. The fact that all these approaches have been used and approved by the House of Lords in recent years suggests: (a) that it may be useful to look at any new set of facts by using each of the three approaches in turn, though it may be noted that in some cases, such as Henderson (supra), the use of the incremental approach may be sufficient to show that responsibility has been undertaken. (b) that if the facts are properly analysed and the policy considerations are correctly evaluated the several approaches will yield the same result. In this context I should refer to the speech of Lord Hoffmann in Stovin v Wise and Norfolk CC[1996] AC 923 . In the course of his speech Lord Hoffmann made reference to the two-stage test (the precursor of the three-fold test) proposed by Lord Wilberforce in Anns v Merton LBC[1978] AC 728 . At page 949 Lord Hoffmann continued: ‘This [the two-stage test] involves starting with a prima facie assumption that a duty of care exists if it is reasonably foreseeable that carelessness may cause damage and then asking whether there are any considerations which ought to “negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may arise”
‘To widen the scope of the duty to include loss caused to an individual by reliance upon the accounts for a purpose for which they were not supplied and were not intended would be to extend it beyond the limits which are so far deducible from the decisions of this House.’
“3.1. CDS was a 31.25% shareholder in SNHL, which was the holding company of the Notaro ‘Group’ of companies. The net value of SNHL was described by JN to be£23 million … And is evidenced in the Clearance Letters to HMRC from BF, that on the demerger each shareholder should receive the percentage of the total assets represented by his or her shareholding. Therefore in CDS’s case she should have received 31.25% of£23 million , viz£7,187,500 , whereas she received properties in cash totalling£5,469,492 , a shortfall of£1,718,008 . In fact the Savill’s report evidences that the true position was that CDS on the demerger should have received 31.25% of£39,748,700 , viz£12,421,468 .”
“[N]o shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up.”
“64. Fifthly, laches is an equitable doctrine, under which delay can bar a claim to equitable relief. In the Court of Appeal, Mummery LJ said that there was ‘no requirement of detrimental reliance for the application of acquiescence or laches’ -[2008] EWCA Civ 287 , para 85. Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239, the Lord Chancellor, Lord Selborne, giving the opinion of the Board, said that laches applied where ‘it would be practically unjust to give a remedy’, and that, in every case where a defence ‘is founded upon mere delay … the validity of that defence must be tried upon principles substantially equitable.’ He went on to state that what had to be considered were ‘the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy’.”