NHS Luton Clinical Commissioning Group v Amanah Health Ltd & Ors [2014] EWHC 2943 (QB)

Case No A40BM023[2014] EWHC 2943 (QB)IN THE HIGH COURT OF JUSTICEVenue BIRMINGHAM DISTRICT REGISTRYMERCANTILE COURTPriory Courts33 Bull StreetVenue BirminghamB4 6DSDate Tuesday, 29 th April 2014
Before
HIS HONOUR JUDGE PURLE QCSitting as a Judge of the High Court
Between
NHS LUTON CLINICAL COMMISSIONING GROUPClaimant-v-
Between
AMANAH HEALTH LIMITED & ORSDefendant
Transcribed from the Official Tape Recording byApple Transcription LimitedSuite 204, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ESDX: 26258 Rawtenstall – Telephone: 0845 604 5642 – Fax: 01706 870838
Counsel for Claimant (instructed by Eversheds LLP): MISS JANE OLDHAMCounsel for Defendants (instructed by Charles Russell LLP) MR THOMAS ROE QC
JUDGMENT
[1]THE JUDGE: This is an application to continue a freezing order which was granted by His Honour Judge Barker QC against four parties: Amanah Health Limited, Mohamed Saleh, Nora Fadel and Saleh & Fadel Limited. The latter two are treated effectively as nominees holding assets for one or other of the others and, therefore, the real issue is whether or not there is a proper cause of action against Amanah Health Limited and Mohamed Saleh (together “the defendants”) and, if so, whether the conditions for the grant of freezing order relief are present. In addition, Judge Barker made a search order, and certain ancillary orders are sought arising out of the search, whereas the defendants say that the search order ought never to have been granted and should now be discharged.[2]A freezing order requires a good, arguable case; a search order, it is said, requires at least that and, in fact, usually considerably more, namely a strong prima facie case. I shall consider first whether a good, arguable case has been shown. If it has, I shall then have to consider whether a strong prima facie case has been shown and, if those hurdles are crossed, I will then have to consider whether or not there is a sufficient risk of(a) dissipation or secretion for the purposes of a freezing order and(b) the destruction of evidence for the purposes of a search order.[3]The claimant is NHS Luton Clinical Commissioning Group (“the claimant commissioning group”), which is one of the bodies to emerge from the division of primary care trusts, and is now responsible for the cost of prescriptions within its area in the circumstances I shall now describe. The first defendant is a registered pharmacy practice which has a contract or arrangement (a deliberately neutral phrase) with “NHS England”, a name used by the National Health Service Commissioning Board. NHS England (which I shall call it for short) pays the pharmacist directly for all dispensed prescriptions. NHS England then recoups the sums paid from the claimant commissioning group by applying a reduction to the overall budget which would otherwise be paid. Thus, although there is no contractual or other legal relationship between the claimant commissioning group and the pharmacist, the activities of the pharmacist have a direct effect upon the claimant’s financial well-being because the more that the pharmacist charges for prescriptions, the more the budget of the claimant commissioning group is reduced.[4]It is said in this case that fraudulent practices were adopted by the pharmacist under the control of the second defendant, Mr Saleh. Mr Saleh is said to be an unsavoury individual with a criminal record, though on examination the offence relied upon was one of strict liability committed by one of his employees and not himself. The effect of the alleged fraud in this case was to inflate many times over the monies actually due for prescriptions. This was to the detriment of the claimant commissioning group because the pharmacist was overpaid substantial sums by NHS England which have in turn been passed on to the claimant commissioning group by reduction of its budget.[5]Regulation 94 of the National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 (“the Regulations”) confers a right of recoupment at the instance of NHS England but not through court proceedings. The Regulations provide for an adjudication and appeal process within the Health Service which expressly excludes the court’s jurisdiction in the absence of ministerial consent. In any event, the claim before me is not a claim by NHS England to recover monies dispersed for medicines; it is a claim by the claimant commissioning group which has suffered loss because of the deductions made from its budget.[6]Investigations were afoot in the early months of this year following a notable increase in the numbers of medicines dispensed by the defendant pharmacist under repeat prescriptions, leading to suspicions that the system was being operated fraudulently. The increase in the number of prescriptions dispensed was in no way matched by an increase in the number of patients and I have no doubt, despite Mr Roe QC’s trenchant observations about statistics generally, that the figures (which are fully set out in the evidence) gave rise to real concerns.[7]It is also said by Mr Roe QC that the presentation of material before Judge Barker was too general to be of use, and not of a sufficient standard to justify relief on a without notice basis. In my judgment, the evidence and skeleton argument placed before Judge Barker on the without notice application sufficiently broke down and explained the various categories of impropriety which were under consideration, though as of yet the losses have not been separately quantified head by head. That may have to happen in due course so far as the available material enables that to be done, but was not an essential requirement at the without notice stage, as a genuine estimate of loss could still be made without any more detailed breakdown.[8]Accordingly, it seems to me that there is here a prima facie case of fraudulent conduct of the dispensing of medicines and the way in which repeat prescriptions have been operated. That evidence is added to. There is more than just statistics. Examples are given, though not that many, of individuals who complain of forged consent forms and the like, and of people who claim that medicines have been ordered for them when they neither needed nor received them.[9]Mr Roe QC, ambitiously but perfectly properly, contends that the claimant has not identified a cause of action on the facts which is sustainable as a matter of law. There are two causes of action which are relied upon, both economic torts. It is now clear that these are separate torts and not overlapping torts. The first is unlawful interference with the claimant’s business and the second is wrongful procurement of a breach of contract. The contract is said to be that between the claimant commissioning group and NHS England. However, it is clear from cases such as Roy v Kensington and Chelsea and Westminster Family Practitioner Committee [1992] 1 AC 624 as applied in Ealing, Hammersmith & Hounslow Family Health Services Authority v Shukla [1993] ICR 710 and North Essex Health Authority v David-John [2004] ICR 112, all cases on predecessor regulations not significantly different from the present Regulations, that the relationship between the claimant commissioning group and NHS England whilst having private law consequences is not a contractual relationship.[10]It seems to me that that is fatal to any case for procuring breach of contract. It may well be that procuring a breach of the private rights arising from that relationship in some way triggers the tort of interference by unlawful means but in that event the elements of the cause of action have to satisfy the other requirements of that tort. I, therefore, put aside for the purposes of this application the alleged wrongful procurement of a breach of contract. In fairness to the claimant commissioning group, Miss Oldham in argument before me very properly accepted that the procurement of a breach of contract claim was not sufficient to get her home at least on the search order aspect of her claim and possibly on the freezing order aspect also. She acknowledged that the authorities as they presently stand require the court to extend the liability for procuring breach of contract into an area in which it has not hitherto been extended. I have considered, amongst other cases, the House of Lords decision in OBG v Allan[2008] 1 AC 1. Their Lordships’ House considered the whole area of economic torts across three separate cases. The result is that the boundaries of the two separate torts with which I am concerned are now relatively well established and that there is no realistic opportunity, at least at the level of this court, of establishing the procuring of a breach of contract beyond contract properly so called.[11]I turn then to consider the elements of the tort of interference by unlawful means. This was authoritatively considered by the House of Lords in OBG v Allan, by Lord Hoffmann principally but also by others of their lordships, most notably for present purposes by Lord Nicholls of Birkenhead. Lord Hoffmann traced the historical development of the tort of causing loss by unlawful means by reference to cases such as Garret v Taylor[1620] Cro Jac 567 and Tarleton v M'Gawley [1794] Peake 270, a case in which a trader by firing a cannon to drive away a canoe caused loss to another trader who was seeking potential customers from the canoe. These old cases, as Lord Hoffmann observed, gained new life in the late 19th and early 20th century with the growth of trade unions. The law was developed to deal with departures from what were then regarded as basic standards of civilised behaviour in economic competition between traders or between employers and labour (see paragraph 56).[12]Lord Hoffmann also emphasised the reluctance of the common law to become involved in devising rules of fair competition, observing that such rules have largely been left to be laid down by parliament. He held (paragraph 51) that the essential requirements of the tort of interference by unlawful means involved interfering with the liberty of a third party, in this case NHS England, to deal with the victim, in this case the claimant commissioning group, by means which were independently actionable by the third party (NHS England) with an intention to cause loss to the victim (the claimant commissioning group). When I refer to “intention”, that would embrace, as both Lord Hoffmann and Lord Nicholls in paragraph 166 to 167 acknowledged, cases in which the inevitable consequence of the defendant’s behaviour was not only to obtain a gain for himself but to cause loss to another. That other might in those circumstances have a cause of action. However, that necessarily presupposes that the perpetrator knows that the inevitable consequence is to cause loss to that other.[13]Taking those various heads of the cause of action in turn, Mr Roe QC says that there is no evidence in this case, and no arguable basis upon which it can be said, that the defendants interfered in any way with the liberty of NHS England to deal with the claimant commissioning group. That on the face of it appears to be correct. What happened is that there were and are dealings between NHS England and the claimant commissioning group. NHS England funded the claimant commissioning group with or without the allegedly dishonest conduct and continues to do so. The result of the defendants’ behaviour was not to interfere with that liberty but to cause NHS England to pay the claimant commissioning group less because of the deductions made from its budget. That is more to be compared, Mr Roe would say, to the two cases referred to in amongst other places paragraph 129 of Lord Hoffmann’s speech, RCA Corporation v Pollard[1983] Ch 135 and Isaac Oren v Red Box Toy Factory Ltd [1999] FSR 785. In that passage, he was considering the claim by OK! Magazine in relation to interference with their rights as against the Douglas’ to have an exclusive television photographic record of their wedding. As Lord Hoffmann observed, all the defendants did was to make OK!’s contractual rights less profitable than they would otherwise have been, which was not enough to establish liability for unlawful interference.[14]Given the legal policy, identified by Lord Hoffmann in paragraph 56 of his speech, to limit the ambit of the tort to the enforcement of basic standards of civilised behaviour, it seems to me that the particular facts of this case do not appear to fit the tort as explained by Lord Hoffmann. However, whilst I was not given a detailed analysis of Lord Nicholls’ speech in OBG v Allan, it seems to me, from a brief perusal, that it is at least arguable that the tort is wider than Lord Hoffmann would allow, though clearly there are some limits. Lord Nicholls did not refer in terms to the requirement to interfere with the freedom of the third party to deal with the victim, though he appeared to accept the correctness of RCA Corporation v Pollard, and, whilst the majority of their Lordships appeared to side with Lord Hoffmann on this point, Lord Walker did not consider that what their Lordships were deciding was likely to be the last word (paragraph 269).Accordingly, I would not in this developing field rule out the claimant commissioning group’s case entirely on this ground at this interlocutory stage. I was not, incidentally, referred to any decisions subsequent to OBG v Allan bearing on this point.[15]The question then is: were unlawful means used? It was said on behalf of the claimant commissioning group that unlawful means were used in the sense that deceit was practised by the pharmacy (and inferentially by Mr Saleh, who on the evidence seems to have been heavily involved in managing the prescriptions). Every time payment for a repeat prescription was sought, it was necessarily represented that the prescription was genuine and had been requested by the patient. All of this is said to have been untrue and to have occasioned loss to an extent which has not yet been finally established but which, on current indications, amounts to approximately £300,000 at least. There is, in addition to the prescription issue, currently under investigation a similar sudden leap in the amount of flu vaccine that was provided. There is a similar question mark over the defendants’ behaviour there, but no quantification exercise of any kind has taken place, so the vaccine issue adds nothing of significance to the questions I am currently considering.[16]The unlawful means, therefore, are said to be deceit. This, the defendants say, is not good enough. The only relevant deceit was that allegedly practised upon NHS. England. However, a necessary element of the tort is that the means should not merely be unlawful in some generic sense but should be actionable at the suit of the third party unless the only reason it is not so actionable is because the third party has not suffered loss. That emerges from the speech of Lord Hoffmann in paragraphs 47 to 50 inclusive.[17]Concentrating now on the position as between the defendant pharmacy and NHS England, the defendant pharmacy was paid by NHS England. One would have thought, therefore, that the operation of deceit would make that actionable in the relevant sense. However, Regulation 94 of the Regulations precludes recoverability except under the statutory procedure, without at all events a contrary direction from the Secretary of State. Based upon that provision and the case of Central Liverpool Primary Care Trust v Charles Bullen Stomacare Ltd [2005] EWCA Civ 1514 Mr Roe QC submits that there is no independent actionability at the suit of NHS England because of the regulatory bar. I do not agree.[18]The Bullen case was decided under predecessor but substantially similar regulations. It does not however seem to me that it can be said that the deceit is not actionable at the instance of NHS England. Bullen merely establishes that the deceit is not actionable through court proceedings. Thus, in paragraph 13 of Bullen, it was said that recourse to the ordinary courts was barred (my emphasis). That is not the same as recourse to other recovery procedures being barred. Moreover, deceit is actionable in the ordinary courts (despite the Regulations) with ministerial consent. It seems to me, therefore, that Bullen does not create any bar under the actionability requirement, assuming an action for deceit to be within the regulatory bar.[19]Moreover, although some of the statements in Bullen are equivocal, it does not seem to me that an independent cause of action in deceit would be barred under Regulation 94, which deals merely with claims for repayment or restitution, not claims for damages. It follows from that, in my judgment, that this element of the cause of action is satisfied to a high degree of arguability and that Mr Roe QC’s objection on this score affords no reason for refusing the relief now sought.[20]It is then said by Mr Roe QC that the third element of the tort is not satisfied. That element is the requirement of an intention to injure. It seems to me that Mr Roe QC is on stronger ground here. Intention to injure is undoubtedly a requirement of the tort. In paragraph 62 of OGB, Lord Hoffmann stated the need:
“ … to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieves the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one's actions.”
As already mentioned, there is a similar passage in Lord Nicholls’ judgment (see paragraphs 164 to 167 inclusive).[21]The evidence in this case does not, in my judgment, establish that Mr Saleh and, therefore, Amanah Health Limited knew of the effect on the claimant commissioning group of the deceit namely a reduction of its budget. If he did not know this consequence, then it seems to me he cannot be said to have intended it. There is a statement, or more accurately an assertion, in the claimant commissioning group’s evidenceto the effect that this is something which Mr Saleh would or should have known. However, that seems to me to be equivocal and, moreover, is unsupported, in my judgment, by underlying justification or proof. It appears that Mr Saleh used to work for a primary care trust in the past and it is said that in that capacity he ought to have known what the system was. However, it is not at all clear to me that this conclusion applies (even arguably) in relation to the relationship between commissioning groups, NHS England and the defendant pharmacy. I am not concerned with the operation of primary care trusts, but with the system which has replaced them, and I cannot assume knowledge of the one from previous familiarity with the other.[22]Moreover, the statement in the evidence that this is something which would or should have been known to him is not sufficient to establish actual knowledge: see Lipkin Gorman v Karpnale [1992] 4 All ER 409 at 416 onwards citing Belmont Finance Corporation v Williams Furniture [1979] 1 All ER 118, [1979] Ch 250 at 268) where

Lord Justice May said this:

“Where an element in the alleged fraud or dishonesty relied on is the other party's knowledge of a given fact or state of affairs, this must be explicitly pleaded. It is ambiguous and thus demurrable, if fraud is relied on, to use the common rolled-up plea that a defendant knew or ought to have known a given fact. If it is desired to allege and plead fraud and, in the alternative, negligence based upon similar contentions then the former must be pleaded first and clearly and the relevant part of the plea confined to the fraud. The allegation in negligence can then be pleaded separately and as a true alternative contention.”
Likewise in Bristol & West Building Society v Mothew [1988] Ch 1 at 15,

Lord Justice Millett said:

“The judge’s references to the solicitor having made a representation which ‘he knew or must be taken as having known’ to be misleading is not an accurate description of the facts of the present case. It is not alleged that the defendant ‘knew or must be taken to have known’ the facts, but only that he ‘knew or ought to have known’ them, which is a very different matter.”
And later on added: “That confuses knowledge with the means of knowledge”.[23]Accordingly, in my judgment, there is no sufficient case of intention made out here. I am conscious in reaching that conclusion that the case has not been fully pleaded as yet. Nonetheless, a full skeleton argument was prepared for the without notice application and that skeleton argument spelt out the basis of the claim. Whilst a sufficient foundation was identified in that skeleton argument, and the evidence, for a finding of fraud in the dispensing process, there was nothing before the court, in my judgment, which justified the conclusion that it was Mr Saleh’s and, therefore, the first defendant’s intention to cause loss to the claimant commissioning group.[24]Accordingly, in my judgment, no good arguable case is shown and it follows that I cannot grant either freezing relief or continue the search order, which must therefore be discharged. In those circumstances it is not necessary for me to consider risk of dissipation or secretion or risk of destruction of evidence or the separate question (also raised) of material non-disclosure, and I do not do so. I will now hear the parties on the consequences of this judgment. MR ROE: My lord, I am grateful. If it assists, I will seek with my learned friend to draw up an order giving effect to that. THE JUDGE: Yes. MR ROE: And put it in draft for your lordship. My lord, then there is the question of costs, of course, which arises immediately. THE JUDGE: Yes. MR ROE: My lord, I invite your lordship to order that the costs of the action to date be paid by the claimant on the basis that we have succeeded. THE JUDGE: Yes, why action to date? MR ROE: Because essentially everything— THE JUDGE: That is all their pre-action investigations which they may end up winning the case, if you see what I mean? MR ROE: I take your lordship’s point as a matter of strict logic— THE JUDGE: Your costs to date though, yes. MR ROE: Certainly our costs to date. THE JUDGE: Your costs to date, yes, I follow that. MR ROE: As a matter of— THE JUDGE: It is really everything other than the costs – have you acknowledged service yet? MR ROE: No, I think— THE JUDGE: No, well then it must be everything on your side, yes. MR ROE: Oh, we have. Forgive me, we have. I am wrong about that, we have. THE JUDGE: Well, there is something tiddly there but that is nothing, yes, I see. MR ROE: My lord— THE JUDGE: Anyway, I am going to be asked to assess them presumably. MR ROE: My lord, yes and could I just— THE JUDGE: I have got a heading here, “Defendants’ costs”. MR ROE: Can I just in that context, my lord, in case it becomes relevant and sometimes it is ask this: that any assessment even if it is summary ought to be an assessment on the indemnity basis and I say that because – not only because the application to continue the injunctions has failed but because of the matters which happily your lordship did not have to rule on in the substantive aspect of these things— THE JUDGE: Yes, I have got to rule on them now, have I? MR ROE: Your lordship does not necessarily need to rule on them but the point is that it is admitted that there was— THE JUDGE: Well, there was admitted non-disclosure which is said was not serious enough to justify discharging the order. MR ROE: Well, if that would have been your lordship’s decision had the merits point gone the other way— THE JUDGE: Yes. MR ROE: —then so be it. My submission your lordship has on that. THE JUDGE: Yes— MR ROE: Regardless of— THE JUDGE: I have got all your yesterday’s submissions on that. MR ROE: The point I make, I suppose, is regardless of whether or not the non-disclosure would have been sufficient to discharge the order, I think it was accepted that the starting point was the order should be discharged. I take it from what your lordship says that in the circumstances if there had been an arguable case your lordship would have said, well, I exercise my discretion effectively to re-grant the order because of the evidence but it does not take away from the fact that there was, in my submission, very serious non-disclosure at the hearing. THE JUDGE: I am just looking at your schedule of costs. Can none of your clients get the VAT back? MR ROE: I will take instructions on that question, my lord. May I do that for a moment? [Pause] My lord, I think that may have been an oversight on our part and my instructing solicitor is just making a telephone call to check that and it is— THE JUDGE: If it might be, I do not want it answered sort of in a rather slapdash way— MR ROE: No, I agree and that is why— THE JUDGE: I always leave permission to apply in relation to VAT and see what happens. MR ROE: Yes. THE JUDGE: Because I mean it gets rather more complicated when you have three and a half clients, as it were. I think you have got four, have you? MR ROE: Yes but I mean I certainly— THE JUDGE: Who were you appearing for, all four? MR ROE: Yes. THE JUDGE: Yes. MR ROE: I certainly accept the VAT is not a sort of question of discretion. Either it is recoverable, in which case we do not get it off the other side, or it is not, in which case we do. THE JUDGE: It is certainly not discretionary but it may be different with your clients [for all I know?], it depends what the arrangements are. MR ROE: It does. Well, perhaps the answer is that, as your lordship says, there should be discretion [inaudible]— THE JUDGE: It is normally possible legitimately to arrange things so that the VAT registered client pays. MR ROE: Yes, well I am perfectly happy [to do that?]— THE JUDGE: Yes, well I will hear what is said on the other side. MISS OLDHAM: My lord, in relation to the finding that the order should be discharged, I do wish to make some alternative applications nevertheless for some disclosure of categories of documents and ability to inspect— THE JUDGE: Let us do it step by step. MISS OLDHAM: —the images that have been taken. THE JUDGE: Yes, what do you say about the costs so far? MISS OLDHAM: Shall I deal with that first or shall I just deal with costs so far? THE JUDGE: Would it affect costs so far? MISS OLDHAM: No, it would not. If your lordship wants to proceed on that basis— THE JUDGE: No, now my mind is on costs I would rather come with a fresh mind to any further application, yes? MISS OLDHAM: So in relation to costs, my lord, I resist the application for indemnity costs. Your lordship has indicated what his finding would have been in relation to the non-disclosure issues. THE JUDGE: Well, I have not but I may have given some— MISS OLDHAM: Indication. THE JUDGE: Yes. MISS OLDHAM: In any event and I would ask your lordship to make an order that such costs that are awarded on an ordinary standard basis be assessed. THE JUDGE: Yes, very well, I have got the – why assess? It is normal to assess them summarily on an application which does not last more than a day which, in truth, it did not. Even though I adjourned overnight for the judgment, the application itself was only a day, was it not? MISS OLDHAM: There was the whole of yesterday and then being here today. THE JUDGE: Yes, well I agree it was all of yesterday but that does not make any difference. MISS OLDHAM: Well, I ask your lordship to order that. THE JUDGE: Yes, well I am going to order the costs to be paid by the defendants – the claimant on the standard basis. I do not consider the circumstances justify indemnity costs for two reasons: one, the defendants certainly did not win on every point and; secondly, I do not consider that the non-disclosure even if otherwise justified in setting the orders aside, a point I have not had to decide, were so egregious as to justify indemnity costs. The two often follow but not necessarily so. MISS OLDHAM: My lord, so be it on costs then. THE JUDGE: Right, well I have seen the schedule. Do you want to add anything to the schedule, Mr Roe? Is it the one which says 25,206.72? MR ROE: Your lordship should have the one that ends 37,236.12. THE JUDGE: This one must be out of date then. MR ROE: It has been updated because of the extension of the hearing into today. THE JUDGE: That was the last one, was it? MR ROE: That was the last one. THE JUDGE: I do not have that one in front of me. MR ROE: Your lordship should have it somewhere because it was handed in. THE JUDGE: I am sure I should have it. MR ROE: Some hour or so ago, I suppose. THE JUDGE: [Inaudible] where it is? Ah, he we are. I never look at them usually, you see, until we get to the end. MR ROE: In the meantime I— THE JUDGE: Otherwise I just go green with envy. MR ROE: Yes, of course. I have taken the instructions I said I would take about VAT and I am sorry about the error but we can cross off the VAT. THE JUDGE: Right, yes. MR ROE: So I think it is right to say it is £31,030.10. THE JUDGE: Yes. MR ROE: Is the figure that I seek. THE JUDGE: Yes. MISS OLDHAM: My lord, before I turn to the more detailed aspects of the draft order that has been handed up to you, I am instructed to ask for permission to appeal in relation to your lordship’s finding on the intention ground. THE JUDGE: Yes. MISS OLDHAM: On the grounds that this is a complex area of the law. THE JUDGE: What do you have to say? I was not really exercising a discretion, was I? MR ROE: On what I say about the question of appeal? THE JUDGE: Yes, I am about to exercise a discretion on costs but— MR ROE: No, I accept that and the— THE JUDGE: I found as a matter of law that there was no— MR ROE: No, I agree. The question, the basis on which it all turned was whether your lordship was persuaded by my friend that the claimant had a good, arguable case, a good arguable case. THE JUDGE: Yes. MR ROE: And your lordship decided— THE JUDGE: Well, I may have got the law completely wrong. I have done that before, I have done that before. MR ROE: My lord, in my submission your lordship did not. The law is— THE JUDGE: I thought you might say that. MR ROE: In relation to that – well, naturally I would but the reason I say it is that that aspect of things is actually laid down by the House of Lords in very clear terms. THE JUDGE: Yes. MR ROE: Which your lordship looked at, considered and applied and there is no scope, in my submission, for the Court of Appeal to say, oh, well because this is a complex area of the law, in fact your lordship’s decision was wrong. In my respectful submission, an appeal [would stand?] no real prospect of success because your lordship correctly identified exactly what the law was and applied it to the facts of this case and it is simply, in my submission, plainly right that the claimant’s case is not a good, arguable case in relation to the question of whether Mr Saleh did what he did because he intended to injure the claimant. Self evidently he did not do it on the claimant’s case by virtue of any intention and your lordship was right. THE JUDGE: Yes, I can see if I had finally come down on unlawful [inaudible] for example, [inaudible] I was against you on that and on the first limb, the sort of Hoffmann limb which I did not really detect it in Nicholls, that those two points would be very interesting but the intention point is, as you say— MR ROE: Yes, quite if there was disagreement between the law lords that— THE JUDGE: Yes, what do you say about that? It is really the intention point that [stuffed?]you, is it not? MISS OLDHAM: Yes, well I make the application for permission. THE JUDGE: Yes, I think I will let the Court of Appeal decide whether to grant permission. MISS OLDHAM: So be it, my lord. THE JUDGE: Yes, as I say, it is really just the first two points I would have been with you but I did not actually find against you in the end on those two points. I came close to it on the first one and did not on the second, so it will still make interesting points in the Court of Appeal but you [already had them?] in your favour so I think I will refuse permission but— MISS OLDHAM: So be it, my lord. THE JUDGE: Yes. MISS OLDHAM: So, therefore, in relation to the draft order, although it is headed, “If continued,” there are paragraphs in there which I would nevertheless ask your lordship to— THE JUDGE: Right, now remind me, where do I find that? MISS OLDHAM: It was e-mailed to my lord’s clerk during the short adjournment. THE JUDGE: Yes, that was sent to me this morning. I said, “Oh, do not give me that, I am writing a judgment”. THE CLERK: [Inaudible] THE JUDGE: Yes, you brought it through, did you not? I have probably left it in my room [inaudible]. MR ROE: What are you saying, “If continued,” what is that? MISS OLDHAM: 4 to 9. MR ROE: We are talking about costs though. THE JUDGE: 28th, no, 29th, it is probably next door. THE CLERK: It is in your room. THE JUDGE: Yes, sorry I left it – sorry, the room is only just out there [inaudible – overlap of speech]. MR ROE: I think we are at cross purposes as to what we are now doing, my lord. I am sorry; I thought we were still on the assessment of costs. THE JUDGE: Yes, I am assessing the costs first. Yes, let us do that. Yes, you are quite right. You do that while Janice goes and looks for the [goodies?], yes. We are on 37,236.12, yes, [inaudible] on that? MISS OLDHAM: Yes, I would ask your lordship to order that those be assessed and not summarily assessed today. THE JUDGE: I am going to assess them summarily, yes. MISS OLDHAM: In relation to that, my lord, just… I am just [inaudible] on a broad brush approach the amount of the costs does seem slightly high to those instructing me and would invite your lordship to reduce it by at least a proportion of about ten per cent or so, a little more. THE JUDGE: Well, anything specific on these hours and rates? MISS OLDHAM: It is acknowledged that there has had to be a large degree of preparation and short time in order to meet the return date, my lord. THE JUDGE: Yes. MISS OLDHAM: And obviously these are London rates and one takes account of that but even so— THE JUDGE: The hours, no, I mean I agree with you, the hours do not look excessive. What about the rates? MISS OLDHAM: Obviously the London rates apply and there are three fee earners listed there which perhaps is excessive. THE JUDGE: They are all right by London standards, are they? I mean you know this. I do not know how much – I am a provincial lawyer. MISS OLDHAM: It is accepted that they are broadly London rates, my lord. There are three fee earners who have been involved here and, therefore, I do invite your lordship to make on a broad approach some reduction to this overall costs bill of £31,000. THE JUDGE: Right, let me look at them. MR ROE: If your lordship needs to hear me on that point, I will come back but I do not know whether your lordship does. THE JUDGE: I am just looking. Where do your solicitors come from? I know they are Charles Russell. Are they near my old chambers or were, are they still there? MR ROE: Yes, more or less, just off New Fetter Lane. THE JUDGE: So there is an extra train fare has not been put on here then. MISS OLDHAM: They are on there. MR ROE: I am sorry? THE JUDGE: There is an extra train fare has not been put on. MR ROE: Is that right? THE JUDGE: I do not know. MR ROE: It does seem— THE JUDGE: This was— MR ROE: Well, this is what— THE JUDGE: Oh, it is today’s date so it is probably up-to-date then, yes, [inaudible] nine hours. MR ROE: Yes, I think it is up-to-date. THE JUDGE: Yes, I see. MR ROE: [May I take?]… We have missed off £70. Could I make an application to amend my costs schedule by adding £70 to it? THE JUDGE: No. MR ROE: All right. THE JUDGE: Now— MR ROE: My lord, I do not know whether any challenge is made to the rates. In terms of an overall reduction, I submit there should not be one. Given what was involved, this was necessarily a matter which involved people working pretty much flat out for the period up until the return date. There is no duplication of work between the three individuals amongst whom it was dispersed and so there is no cause for reduction there. THE JUDGE: I know when you get search orders you do get quite a lot of attendances on others and attendances on opponents, do you not? MR ROE: I mean my clients were essentially faced with being hit with this search order, a great mass of evidence, a very serious claim being made against him and, in my submission, this is all pretty reasonable and proportionate. I appreciate it is a lot of money but these things do cost a lot of money because they take a lot of time. [Pause] THE JUDGE: Yes, I think there is some scope for reduction on some of the hours but they are broadly all right. I would have thought that some of the hours on documents were perhaps pushing it a bit and despite what I acknowledge to be the inevitable pressures that arise from search and freezing orders being made that some of the total amount of attendances on opponents and others were a bit high but not by not by much. I will reduce the figure claimed to £35,000. MR ROE: My lord, that would be a reduction on the figure if it included VAT. I had said, in fact, that we— THE JUDGE: Sorry, I have got that wrong, yes. MR ROE: I will do the calculation and take the VAT off 35,000, as it were, if that makes sense. I think that is what your lordship meant. THE JUDGE: I have taken 2,236 which 20 per cent, that is about 29½ — MR ROE: Are we working off the same document? THE JUDGE: 29½ sorry, I was looking at the wrong figure, you are quite right. MR ROE: You were. THE JUDGE: 29½ rather than 31 and 30— MR ROE: 29½. THE JUDGE: Yes. MR ROE: Got it, thank you. THE JUDGE: I am rounding, so I will do it— MR ROE: Yes, all right. THE JUDGE: Rounding. MR ROE: £29,500. THE JUDGE: Yes. MR ROE: Thank you. THE JUDGE: You want permission to – no, I have refused that. MR ROE: You have dealt with that, so permission you have dealt with, costs dealt with. THE JUDGE: Now, where is this order? Did we find it, Janice? THE CLERK: [Yes, you’ve got it?] THE JUDGE: Where is it? THE CLERK: [Inaudible] I put it on your table. I’ll re-print it. THE JUDGE: All right. MISS OLDHAM: My lord, that draft order came with a covering e-mail which said that paragraphs 4 to 9, the order is [inaudible] in fact, paragraphs 4 to 9— THE JUDGE: I have got it. MISS OLDHAM: Yes. THE JUDGE: I have got it, Janice, I have got it. Yes, right? MISS OLDHAM: We leave 9 out but it will be paragraphs 4 to 8 would still be sought even if the orders were discharged as in the event your lordship has discharged them and so your lordship will see then, crossing out 1 to 3 and 9 because your lordship has dealt with costs, that 4 to 9 – well, 8 is permission to amend the claim form but looking at 4 to 7 these are requests for disclosure and an inspection of the computer images in respect of [inaudible]. If I let your lordship just cast an eye briefly and make an application effectively under Rule 31.16 – 31.12, I am sorry. The court does have power under Rule 31.12 to make an order for specific disclosure or inspection at any time. THE JUDGE: Yes. MISS OLDHAM: And the reason that the claimants do ask for these specific orders under that provision are that we are presently before the court, the imaging has been done, it is a costly process and to destroy those images and we then deal with matters by way of ordinary disclosure starting all over again would be disproportionate but it is not an answer to say, well, just preserve that and you cannot look at it now but you can look at it when disclosure comes around in the normal way would not be appropriate because there is such concern as to the discrepancy in dispensing and the matters which appear to the claimants to have happened in this case and there is concern as to the way in which Mr Saleh has engaged with matters to some extent in his affidavit that the material that we seek would, in fact, have been available to the claimant if it had made a pre-action disclosure application under Rule 31.16 so [inaudible]— THE JUDGE: 4, 5, 6 and 7, is it? MISS OLDHAM: Yes, my lord, so it will be— THE JUDGE: What do we do with 8? MISS OLDHAM: 8 is just permission to amend the claim form which is separate, my lord, so just dealing with – I will come to that in a the moment— THE JUDGE: I have seen that, yes. MISS OLDHAM: But dealing with the specific applications for, in effect, the ability to inspect and use for the purposes of the proceedings the categories of documents there set out, including the relevant documents within the imaged computers which are the images that are presently held by the computer expert and the supervising solicitor— THE JUDGE: You have seen these, have you not? MISS OLDHAM: No, we have not looked at them yet. THE JUDGE: You have not seen them? MISS OLDHAM: We have not been able to look at them yet. THE JUDGE: Yes, I see. MISS OLDHAM: Because we are not entitled to. THE JUDGE: They have just been secured by the— MISS OLDHAM: They have been secured and we ask for an order under 31.12, a specific order, allowing us to do that. THE JUDGE: Yes. MISS OLDHAM: For those reasons, my lord. THE JUDGE: Yes. MISS OLDHAM: It will assist the efficient progress of the proceedings and it would be a proportionate order to make. The documents are specific and [inaudible] they would have to be disclosed anyway and, as I say, in these circumstances of this case had this claimant made a pre-action application for disclosure of these documents, I respectfully submit it would have succeeded. THE JUDGE: Yes. MISS OLDHAM: So that is why we ask for those orders and your lordship will see that I ask for permission to share them with BDO who are assisting the claimant [inaudible]— THE JUDGE: Obviously if you can see them, you have got to show them. If you want to use them, you have got all the people on the team need to use them, yes. MISS OLDHAM: And then number 8, the provision to amend the claim form that was, as your lordship can see— THE JUDGE: I saw that yesterday, yes. MISS OLDHAM: It is really now that Miss Fadel has notice of the proceedings and the nature of the claim crystallises, the claimants say, the cause of action against her in respect of restitution and/or trust because she now knowing of the claim it would be unconscionable for her to [inaudible] that is why we seek [to add that?]. It really follows on from a similar claim against Amanah Health— THE JUDGE: You are going to put it in the particulars of claim anyway. MISS OLDHAM: My lord but we need to put it in the [inaudible]. THE JUDGE: Yes. MISS OLDHAM: So those are the specific applications I make, my lord. MR ROE: My lord, so far as paragraph 8 is concerned, the permission to amend the claim form, the proposed amendment is in the bundle I think in the amended claim form and, in my submission, the proposed amendment is, if I may be forgiven for departing from the technical term, complete tosh, it does not make any sense at all as a matter of law and I would wish to have that argument properly on a claim where an application has been made before the court, because I do not accept that it discloses a cause of action. THE JUDGE: Yes. MR ROE: So that is a matter that ought to go into the particulars of claim. My lord, so far as the others are concerned, it really is, in my submission, bordering on the abuse of the process of the court for the claimant now to say, well, we want all of these rather draconian orders to be made in circumstances where the search and freezing orders have been discharged. What has happened is that the claimant came to this court exparte, got an order to which your lordship has just decided they were not entitled and as a result of that has managed to conduct the search of the premises and obtain various information and what they are now saying is that far from the ordinary consequence of the discharge of the orders taking place, namely that the information has to be given back, they should be entitled to hang on to it. THE JUDGE: Yes.25. Dealing with the specifics of it, paragraph 4 of the order talks about the bank statements. There is no order at the moment that the bank statements should be disclosed; we went into this yesterday. Notwithstanding Mr [Serge?] in his affidavit says that the defendant has not complied with the order for disclosure of the bank statements, there is not one. They do not fall within the terms of the search order, so that is simply nonsense, in my respectful submission, and that should go on that ground if no other. Paragraph 5 is a compliant about the failure to provide information in the search order that your lordship has just discharged so that cannot work and, in fact, if you look at those paragraphs of the search order, my lord, may I just take your lordship to them for a second to make the point I wanted to make? THE JUDGE: You will have to tell me what it says. I have not brought all the files into court.26. So it is the requirement and they managed to get this past Judge Barker QC, I do not know whether his attention was drawn to how broad this was but one suspects not, they managed to get that past the court on the exparte hearing in the terms that requires Mr Saleh and the other defendants to disclose essentially every transaction that the business has ever had to provide and now having had the substantive order discharged my friend says, well, you should still grant it on the basis that they could have got it. They would never have got this and you can just imagine if you went before a court in the ordinary way and said we have just issued our claim form but can we please have an order compelling the defendant to give us an account of every transaction his business has ever done by 4.30 tomorrow, you would be laughed out of court and, in my submission, that ought to go.27. So far as 6 and 7 are concerned, I reiterate my point that the search order should never have been granted because the claimant, your lordship has found, did not have a good arguable let alone a strong prima facie case and it would be quite wrong in those circumstances to reward the claimant’s behaviour in coming to court to seek the search order. THE JUDGE: I have known cases, that is why I asked the question I did, many years ago I got… the very last exparte order I got before I took the silk, a case called Dubai Bank v Galadari [inaudible] orders and then the very first thing that happened to me after I took the silk was it was all discharged for material non-disclosure [inaudible]— MR ROE: Well, there is a— THE JUDGE: By that time they not only had the documents but they were all in the evidence and had been used and Mr Justice Morritt as he then was took a pragmatic view and said I am not going to order you to have these back, they are all effectively in the public domain. That is not this case, they are still in the hands of the expert, is that right or the supervising solicitor? MR ROE: Yes, the computers have been imaged and, of course, when one thinks what is on the computers and, of course, it is everything, it is my client’s entire business which is on those computers which is no doubt full of stuff which is completely irrelevant to this case, lots of it confidential. The claimant has got this enormous advantage and, in my submission, my lord, I mean from a personal point of view there is a pleasing symmetry in your lordship’s anecdote because this is my first case in silk but [laughs]… THE JUDGE: You have been luckier than me. MR ROE: But the order simply does not stack up, in my submission, and the correct answer is that it ought to be handed back and this action in circumstances where there is no warrant for a search order or a freezing injunction, as your lordship has found, the action ought to continue in the ordinary way and all of this information which is confidential information which belongs to my client ought to be handed back. THE JUDGE: Yes. MR ROE: And if in due course in the course of disclosure he produces – assuming the case goes forward – if in the course of disclosure he produces stuff and they say, well, there is not enough and you should have produced other things, well there are processes to deal with that and no doubt inferences can be drawn against him if he does not disclose them but there is no basis for giving the claimant the benefit of its improper application in the first place. MISS OLDHAM: My lord, I should just point out in relation to the orders, they certainly were drawn to His Honour Judge Barker’s attention and, indeed, there was a process of drafting— THE JUDGE: I know he is very picky when it comes to [width of?] orders. MISS OLDHAM: —contributed to by His Honour Judge Barker himself where he e-mailed it back with some amendments and so forth, so I think it can safely be assumed he saw it. THE JUDGE: Yes, do not worry about that point. Do not worry about that point, yes. MISS OLDHAM: But I do reiterate that your lordship says it can be a pragmatic solution but also in this case given the concerns that your lordship acknowledged at the outset of this judgment as to what appears to have been happening here, albeit your lordship did not go on to find that the orders should remain in place, the matters of concern that it will be an appropriate case in which to allow sight of the relevant documents to the applicant’s solicitors. THE JUDGE: What is going to happen to all these documents? Who has got them? MISS OLDHAM: They are all in the hands of the supervising solicitor [inaudible] two of the images of the three image computers, the images are in the hands presently still of the computer expert who went there overnight and ran the process [overnight?]— THE JUDGE: Whose expert is the computer expert? MISS OLDHAM: The computer expert, MD5 Limited, is neutral in the sense, in the same sense [inaudible] supervising solicitor. THE JUDGE: He is the equivalent of the supervising solicitor. MISS OLDHAM: Yes. THE JUDGE: They are going to hang on to them, are they? MISS OLDHAM: They have got the material at the moment and my client’s solicitors, my instructing solicitors have not looked at it because that— THE JUDGE: No, I understand that but they are safe, this is the point. MISS OLDHAM: They are safe, they are in their premises. THE JUDGE: And the same with paragraph 7, so who are these documents taken by? MISS OLDHAM: The documents are in the hands of the supervising solicitor. THE JUDGE: The SS, yes. MISS OLDHAM: Yes. THE JUDGE: What usually happens when there is an order of discharge, are they then handed back by the supervising solicitor? MISS OLDHAM: It would depend on the case and, for example, in the case your lordship mentioned [inaudible]— THE JUDGE: I mean these are copies they have got, are they not? MISS OLDHAM: These are copies, yes. THE JUDGE: The imaging also is a copy. MISS OLDHAM: It is a copy. THE JUDGE: So it is not affecting— MISS OLDHAM: Not at all. THE JUDGE: —the defendants’ access to their own computer records. MISS OLDHAM: No, my lord, so it is a question of allowing the applicant to inspect, extract and copy them and to use them for the purposes of the proceedings and to share them with BDO for that purpose. THE JUDGE: Yes, thank you.[25]An application is made to me by the claimants for a number of orders relating to disclosure of documents. They wish to see, firstly, the bank statements of the first respondent since inception of trading to date. That is a narrow enough category and as I have jurisdiction to order specific disclosure at any time, I am minded to order that so that the claimants at least have the full picture of what has happened on the bank account before finalising the particulars of claim.[26]I am not convinced that it is appropriate at this stage to make any of the other orders sought. The respondents are asked to provide the applicant’s solicitors the information in the various paragraphs of the search order which I have now discharged. Prima facie as I have discharged it, it should cease to have effect and not be reintroduced through the back door. The order is quite wide. I am perfectly happy to accept that the width was considered by His Honour Judge Barker to be appropriate, but it does appear to extend to all documents concerning the first respondent’s business which may go beyond all relevant documents.[27]So far as paragraphs 6 and 7 are concerned, these concern images and documents now in the possession or under the control of the supervising solicitor or the computer expert. I shall direct that they remain in the possession of the supervising solicitor and computer expert respectively until further order. It seems to me that that protects them from any unlikely disappearance and that, after whatever disclosure takes place, which I am inclined to the view ought to be rather more focused than usual and not just the usual order for standard disclosure, will enable the court if necessary to police disclosure by reference to documents held by third parties.[28]I shall grant the applicant permission to amend the claim form. Mr Roe said it is tosh and he wants to argue it at length. Well, when the particulars of claim come out, if he maintains that view he will have his opportunity then. I do not wish to inhibit the claimants from not extending the claim which is all they wish to do from an incomplete claim to an actual cause of action against the third defendant. Whether they manage to produce such a claim will depend upon the contents of the particulars of claim. So I will grant that permission to amend on the usual terms, unless you try to persuade me it should be on some other terms— MISS OLDHAM: No. THE JUDGE: And make the order in paragraph 4, not in paragraph 5 but make in effect what are preservation orders in 6 and 7 saying the documents and images, the copy documents and images stay where they are. MR ROE: Could I just trouble your lordship on the date in paragraph 4 which is causing some concern behind me THE JUDGE: Yes, certainly. MR ROE: By four o'clock tomorrow given that the basis for the emergency orders has fallen away, could that be— THE JUDGE: Yes, well that may not be— MR ROE: Could that be 14 days from today? THE JUDGE: You can access them online, can you not? MR ROE: I think so. I would not want to— THE JUDGE: That is what we were told yesterday. MR ROE: We were told, no— THE JUDGE: In fact, you told me. MR ROE: No, you can certainly access statements online. What I am not sure of— THE JUDGE: [Well, all he?] needs to do is go and buy a printer. MR ROE: —is whether you can access statements going right back to the inception of trading online. THE JUDGE: I see, yes. MR ROE: That is the distinction I want to draw. THE JUDGE: Yes. MR ROE: I agree I told you yesterday they can be and they can be, as I understand it, found online. Could we have 14 days in the ordinary way? THE JUDGE: What do you say about 14 days? MISS OLDHAM: My lord, seven days ought to be enough to have that from the bank, to be honest. THE JUDGE: I think seven days ought to be enough. MR ROE: Well I do not want to argue the toss indefinitely but in circumstances where your lordship has already said that you do not think my friend has any cause of action, it is pretty generous to grant it at all, one might say, so— THE JUDGE: I do not know. I have not seen the next pleading yet. You can have seven days. MR ROE: All right, thank you. MISS OLDHAM: Would your lordship be minded to order that there be an order that the documents which we are not presently able to receive by way of a disclosure that are not in the hands of the supervising solicitor and the computer expert, so that is the documents in paragraph 5 [inaudible] that they at least [inaudible] they be preserved by the defendants? THE JUDGE: They are under an obligation to preserve documents which are relevant to the proceedings. I am not prepared to make another order about it. MISS OLDHAM: So be it. THE JUDGE: Thank you. Thank you very much. Will you liaise between you to do an appropriate order please? MISS OLDHAM: We will, my lord, yes. THE JUDGE: Thank you. Oh, where is the case going to happen? MR ROE: Yes, forgive me, we should have determined that. MISS OLDHAM: We ask your lordship to not make any order to transfer it. THE JUDGE: You had better make an application then, I suppose. MR ROE: Unless your lordship is prepared to deal with that question now, we would submit it ought to – the only reason it is here is because it is convenient for the claimant’s solicitors. THE JUDGE: Yes. MR ROE: And Luton, I know Luton is not that far from here but it is much nearer London than it is here. My client lives in Thornton Heath, to have to travel— THE JUDGE: Works in Luton. MR ROE: Well, at the moment works in Luton. THE JUDGE: He does at the moment. MR ROE: But is, as we know, having to sell the practice and spend some more time with his family in Thornton Heath. This would be [suitable?] to be transferred to London, in my submission. MISS OLDHAM: It is right I should point out to your lordship that most of the claimant’s witnesses do live in or around the Luton area, not all but most. THE JUDGE: Yes. MISS OLDHAM: But nevertheless your lordship is asked to retain it here. THE JUDGE: If it is around Luton there is not much difference between Luton and London and Birmingham, is there? MISS OLDHAM: We discussed this yesterday. It is a few minutes up the M1 and it is a few minutes down the M1. THE JUDGE: It depends how they get here. Is there a train service from Luton? I mean you can get from Luton to London. I do not think you can get from Luton to Birmingham very easily by train but you can go over to… what is it called? Watford Junction, Milton Keynes, where did I go from recently? Yes, I took a train from St Albans to Watford Junction; it is not too far away from Luton. MISS OLDHAM: Yes, it is not too— MR ROE: That is a famously provincial line, I think, is it not, from the minor St Albans station, I think? THE JUDGE: It is. It is a wonderful little line. It goes up and down all day. MR ROE: Yes, it is the subject of recurrent campaigns to preserve it, I think, but, my lord, the point about Luton it is rather easier to get to London than it is to get to Birmingham, it is on a direct line from Luton straight down to Blackfriars where you can walk to the high court in about ten minutes as opposed to having to chop and change and come up here which is difficult. THE JUDGE: Which division would you say? You said Queen’s Bench yesterday but is it Queen’s Bench? You have got Queen’s Bench, Mercantile, Chancery or Commercial. MR ROE: Well, it depends quite how the claim is put. If my friend wants to advance these restitution and trust type claims, perhaps it is the Chancery Division, I do not know but certainly I doubt that it is the Commercial Court, it is not really – it may be Mercantile in the broader sense that that covers general matters of business but I would say the ordinary Queen’s Bench Division is still the appropriate place to go. MISS OLDHAM: My lord, I am instructed that if it were to be in London, you ought to be asked to transfer it to the London Mercantile. THE JUDGE: Yes, well it does seem to me that the case is not naturally connected to Birmingham, there are no witnesses here. The solicitors for the claimant are here but Eversheds have a notable national presence and London is not massively inconvenient. It seems to me the case should go to London and I will transfer it to the Queen’s Bench Division, Mercantile Court in London. If you want to make an application there to transfer it when you have seen the particulars of claim it can be done then. MR ROE: Thank you. THE JUDGE: [I hope not?] because I do not think there is anything wrong, I mean I do not like turning work away from Birmingham but because just looking at all the witnesses it does seem to be more convenient overall for London. Thank you. MISS OLDHAM: My lord. [Hearing ends]

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