“In December 2000, the Husband [Mr Harrison] considered that Interchange had a rosy future. He hoped that it would service all Dollar’s cash needs in the long-term and that he could groom it for sale to that organisation within a 2 year period. In an affidavit deposed to in December 2000, the Husband said … “I anticipate that within 24 months Dollar Group would unhesitatingly acquire this business for a substantial sum”
“During this litigation the Wife claimed that the Husband had deliberately chosen not to operate this business [Cash on Cars] in order to reduce its value. It is her case that failure of the business “is cosmetic and manufactured temporarily for the purpose of these proceedings”
“The Husband came across as much less volatile individual than the Wife. He was calm and more measured with an air of resignation about him. It is clear that he failed to inform the Wife about the sale of Fastcash. He says that he did not do so because he felt that she would have interfered with the sale. He certainly hid his affair from the Wife and did not tell the truth about moving in with Mrs Watson, when the parties separated in December 2000. Despite these points, I find that his presentation of his assets has been fundamentally correct throughout and I consider that he has done his best to make a success of his various business ventures. I note that, until the sale of Fastcash, this family did not have any significant wealth.”
“The costs. (b) The Wife’s attitude to the Husband and his disclosure. As set out above, she has described this litigation as “white collar crime with a divorce attached”
“I appreciate that the level of costs is high, but I want to be realistic so that you understand what is involved if this matter is to be pursued. I will keep costs as low as I can, but it is inevitable that such a piece of litigation will be expensive.”
“VH [Mrs Harrison] believes that JH [John Harrison], together with his accountant (Ian Nunn of Nunn Hayward) conspired to take money out of the assets owned jointly by John and Vivien. Further, she believes they conspired to produce inaccurate financial details before the court, so that the court was unaware of the size of assets available for distribution in the divorce proceedings. Nunn was, at one stage, Vivien's personal accountant as well as accountant to the relevant companies. He has a track record of providing misleading financial statements etc which have led to sanction. We have been asked to see if we can bring a claim against JH, Nunn (& ors) for conspiracy, negligence etc. VH does not want to go back before the Family court as she has no confidence in their ability/willingness to deal with her allegations, in the context of Family Proceedings.”
“The very confident language used by Mrs Harrison was reflected in her demeanour and her instructions at the consultation at my chambers on26 January 2006 . She was very much of the view that she had a compelling and unanswerable case that her former husband had deliberately misled the Court and she was keen to issue proceedings against him, Mr Nunn and Dollar as soon as possible. Her conviction that she had been cheated by Mr Harrison with the help of Mr Nunn and Dollar never wavered. ”
“I think it important that I explain why I considered that it was a significant document. Mr Harrison’s evidence at the ancillary relief hearing had been that, since Dollar had brought the foreign exchange wholesale operation in-house, Interchange was not going to be nearly so successful as he had hoped. He supported his case about the lack of profitability by reference to management accounts that he had produced in advance of the PTR in May 2002. The information in the management accounts could not be reconciled with a number of daily reconciliation sheets that Mrs Harrison said she had received from an anonymous source. On the strength of these documents, Mrs Harrison’s expert valued Interchange as being worth as much as£1.68 million . This report was I believe served on Mr Harrison either at or shortly before the PTR, at which various disclosure orders were made against Mr Harrison. Later that day, Mr Radwan, an employee and director of Interchange, reported to the police that there had been a break-in earlier on in the month and he accused Mrs Harrison for being responsible for the break-in. At the trial, evidence was given on behalf of Mr Harrison that the computers had been tampered with during the break-in giving rise to the implication that no reliance could be placed on the reconciliation sheets that had been sent to Mrs Harrison. He produced other reconciliation sheets which supported a much lower profit figure and a much lower valuation. Mrs Justice Baron concluded that the valuation methodology adopted by Mrs Harrison’s valuer was flawed and she eventually concluded that the company had no positive value at all. In the circumstances, there was a compelling case that the break-in had been invented to throw doubt on the validity of the documents that had been obtained by Mrs Harrison. If this were the case, then it was likely that the reconciliation sheets that Mrs Harrison had received were accurate. This being so, I regarded it as obvious that, if Mrs Justice Baron had been persuaded that the break-in had been invented in order to raise doubts about the reconciliation sheets, she would have been likely to come up with a positive value for Interchange. However, as I made clear to Mrs Harrison both before the issue of proceedings and subsequently (see in particular the Note for Counsel dated24 October 2007 ), I was always of the view that, to be confident of establishing that the break-in had been invented to cast doubt on the reconciliation sheets and to show that Baron J would probably have come up with a positive value for Interchange, the point about the break-in needed to be linked to the failure to disclose bank accounts. In other words, the evidence of a break-in was potentially of great significance if Mrs Harrison were right about the hidden assets in the non-disclosed bank accounts but was not of itself sufficiently compelling to justify running it as a stand-alone issue of fraud.”
“[i]t will only be in cases where the absence of full and frank disclosure has led the Court making…an order that is substantially different from the order which would have been made if such disclosure had taken place that a case for setting aside can possibly be made.”
“Mrs Harrison was very concerned that, if Mr Harrison got wind of what was happening, he would take steps to dissipate his assets. Since she had been compelled to obtain freezing orders on at least two previous occasions, her concern about this seemed entirely justified. This is why at that time, we were not thinking of making a similar application against Dollar because she was convinced that it would be impossible to prevent word of that getting back to Mr Harrison.”
“As I am not a matrimonial practitioner, I thought it sensible to seek the advice of a matrimonial silk to ensure that the proposed strategy did not conflict with any guidance given by the Family Division and would not otherwise be thought to be inappropriate. I discussed my strategy with Charles Howard QC, who specialises in financial provision and I was pleased to discover that he considered that the proposed course was appropriate.”
“I have now received information that Interchange has, and has had since February 2001, accounts at the Cavendish Square branch of the Royal Bank of Scotland which were not disclosed within the ancillary relief proceedings in 2001 and 2002 despite the fact that Mr Harrison was ordered to produce all the bank statements on all of Interchange’s accounts. Assuming that the information I have been given is accurate and that these accounts were being used in 2001 and 2002 (which I have very good reason to believe is the case), I will then have conclusive proof of the fact that not only did my former husband lie on oath in our ancillary relief proceedings but that he did so in order to hide the true value of the joint assets.”
“In addition, I have learned through information provided by one private investigator, which has been corroborated by other private investigators,that Mr Harrison hid from the Court the existence of a number of Interchange’s bank accounts. I refer to the management accounts that Mr Harrison produced for Interchange exhibited at VRH7. These showed that Interchange had two sterling accounts with the Royal Bank of Scotland Cavendish Square branch, numbered 10153750 and 10132869. Interchange also had a Canadian dollar account and a US dollar account. Recent information provided by private investigators has shown that at the date of the hearing, Interchange had two other sterling accounts at the same branch (numbered 10178400 and 10153726) which were opened on19 February 2001 and were in use at the time of the proceedings. Indeed account number 10178400 apparently had a balance of approximately£1,839,200 in May 2005. In addition, there are at least three other accounts in Interchange’s name, namely, 10186756, 10192624 and 10192632. The existence of these further accounts was never disclosed at the time. At the PTR before Mrs Justice Black on27 May 2002 Mr Harrison’s counsel told the Judge that he had disclosed to us ‘every single bank statement for my client and the businesses from separation.’ I attach at VRH7 a copy of the transcript together with a schedule drafted by Sears Tooth illustrating Mr Harrison’s bank statement disclosure as at25 September 2002 , and extracts from the management accounts of The Interchange Organization Limited showing the accounts held at Royal Bank of Scotland in 2002. In reliance on this assurance I limited the information sought in my questionnaire. In the light of the information obtained through private investigators, this appears to have been a deliberate misrepresentation. I should perhaps add that I have informed the police who are investigating Mr Harrison’s financial affairs and actions taken by our joint accountant about these bank accounts. In my dealings with DS Lambert who has been liaising directly with Revenue to confirm the factual evidence, I was given the impression that the information I had provided was accurate, including the fact that there were undisclosed bank accounts. The reason why it is necessary to make an early application for disclosure of these accounts is simple. If, as I expect may well be the case, some or all of these accounts were not dormant at the time, then I will have conclusive proof that Mr Harrison lied to the Court in order to suppress the value of Interchange. I would then not hesitate to proceed with my intended action to set aside the judgment delivered by Mrs Justice Baron in September 2002, and bring to account/fully investigate the role which others may have played. On the other hand, if the information I have been given turns out to be wholly inaccurate, I would want the opportunity of considering whether to proceed with my claim even though, as I pointed out above, I have compelling evidence that Mr Harrison’s evidence on other matters was untruthful. To ensure that there is no possibility of any active bank accounts remaining hidden, I would ask that the disclosure order should extend to any accounts in the name of the following entities set out in Schedule 2 of this witness statement, namely: FirstrateFX Limited, now known as V5 Car Loans Limited (company number 3747252), First Rate Foreign Exchange Limited, now known as Interchange Retail Limited (company number 4168560), The First Rate Group Limited (company number 4169370), and The London Cash Exchange Wholesale Limited, now known as The Interchange Organization Limited (company number 4019832). Mr Harrison’s evidence before Mrs Justice Baron was that these companies were all dormant and that they were simple “reservations of name” that he made when he renamed Interchange as FirstrateFX. Bearing in mind the various discoveries I have made, I consider that there are powerful reasons for not taking what he said about these other companies at face value. Finally, I should make it clear that if the disclosure exercise shows what I anticipate it will show, then I will immediately be seeking wide-ranging injunctive relief against Mr Harrison. It is for this reason that I have asked that the Royal Bank of Scotland should not divulge the existence of this application to anyone else including Mr Harrison, any of Mr Harrison’s associates, or any officer, servant or agent of Interchange or any associated company. In the light of his previous conduct, Mr Harrison would not hesitate to take steps to dissipate his assets if he found out what was going on.”
“It has been brought to my attention that a bank account was opened at The Royal Bank of Scotland Cavendish Square branch on19th February 2001 . The account number is 10178400 and the balance in hand at June 2005 is£1,839,241 . This account was not disclosed to the Court in bundles “J” (Burgundy) and “K” (Yellow). A further account was opened at the same branch, number 10153726, and its existence was also undisclosed. The disclosure of management accounts, Court bundle page number 000204, being the final updating disclosure on which the Court and Grant Thornton relied shows quite clearly the individual bank accounts under current assets which exclude the two accounts mentioned above. The Court bundle list of business accounts disclosed also excluded these accounts.”
“RBS Re Interchange Organization Ltd”
“I will go ahead anyway. If I get a blank then I’ll go ahead anyway.”
“While there is probably sufficient evidence available for us to plead a case against John, we must advise you against issuing proceedings against him and subjecting yourself to a cross-undertaking in damages consequent upon obtaining a Freezing Order. There is no real lynchpin here to convince a Judge to make a finding of fraud. All the evidence we have at present could quite possibly and plausibly be explained away by John and the risk to you is substantial in those circumstances”
“Vivien, we know you feel very strongly about John’s [Harrison’s] dishonesty and are anxious to proceed. However, we are very concerned that you might be throwing good money after bad and, although we consider the claim can be pleaded, there are obvious dangers in proceeding.”
“it is fair to say that is not an enormous amount of money” to which the judge responded “Not in the context of this case it is not, is it?”
“The money in the RBS Account was in any event an asset of Interchange which should have been disclosed during the ancillary relief proceedings. As we later learned, the money in the RBS Account was in fact disclosed in the ancillary relief proceedings, so presumably Mr Harrison himself considered it to be an asset of Interchange which he was required to disclose. I do not believe it would have made any difference to the way Mr Justice Butterfield approached the application if I had said that the account appeared to be an account in the name of RBS which held money of Interchange. In purely monetary terms the revelation that Interchange held a further£25,000 in a separate bank account may not have made a difference to the actual Order made by Mrs Justice Baron. In my oral submissions I expressly stated “it is fair to say that is not an enormous amount of money” to which the Judge responded “Not in the context of this case it is not, is it?”
“The ‘big picture’ points that would give you a chance of getting the judgment overturned have been knocked out. In any event even if you did win at trial – which we are virtually certain you will not – your husband has no money or substantial assets which you will be able to pursue on renewed ancillary relief proceedings. There is nothing to gain by continuing to prosecute this claim, and everything to lose both financially and emotionally.”
“Our unequivocal advice to you is that you have come to the end of the road and that you must do the best deal you can now, before the strike out application is heard, and discontinue the proceedings. You asked us to play for more time so that you could consider your position and this we did. You must now follow our advice and discontinue the proceedings and make an offer to pay JH’s costs. Manches have in their letter offered settlement terms which we very strongly recommend that you accept. You will have to pay your husband’s costs on the standard basis but you will not have to pay damages pursuant to your cross-undertaking on the freezing order. We believe that this is a good offer in the circumstances and it is quite possible that we can still strike a deal with Manches on costs under which you will pay less than your ex-husband would be likely to be awarded by the Court on an assessment. You will save the costs of instructing us to prepare for and represent you at a 1-day hearing in October which, we believe, you are almost bound to lose resulting in payment of vastly increased costs to your ex-husband no doubt on the indemnity basis and possibly a wasted costs order.”
“In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect … On any footing, the duty of care is not a warranty of perfection.”
“I have to be careful not to give advice that suits me. Though I didn’t think her case would ultimately succeed, I couldn’t hand on heart, say it was hopeless.”