Patrick Hughes v Martin Bellamy & Ors

MR. JUSTICE RAJAH:

1. I am not going to give a full judgment over directions for holding over an injunction to a return date but I will give you my reasons in relation to the issues which have been in dispute of which the principal one seems to be disclosure of the documents which are identified in Mr. Downes’s skeleton argument at paragraph 33.

2. In both oral submissions and in its application notice the third defendant, through its solicitors and its counsel, has relied on an independent valuation of AIP’s assets by Touchstone Advisory and independent insolvency advice by, amongst others, Alvarez & Marsal and Teneo Financial Advisory and also the terms of the transaction of sale on the basis that it prevented advance notice to the claimant. All of this appears to be relevant to the proprietary of the transaction and to whether the third defendant's conduct and dealings with Mr. Hughes was misleading and disingenuous. It seems to me to be relevant the issues which the court will have to consider on the return date.

3. The claimant has asked in correspondence for sight of those documents which it now identifies in paragraph 33 of the skeleton argument and the third defendant has refused to provide it, saying that it might include it in the evidence which it files in answer, it might not. No formal application has been made by the claimant for this disclosure but in its skeleton argument it relies upon CPR 31.14. The difficulty for the claimant with CPR 31.14 is it does not seem to cover the particular statements which were made by Mr. Head and by his instructing solicitors, because they were not made in a statement of case, a witness statement, a witness summary or an affidavit. They were made in an oral hearing and in an application notice.

4. I tested whether or not there is any real objection to my exercising the jurisdiction and while no reasoned basis is given on the part of Mr. Head, he does not concede that I have jurisdiction. Mr. Downes says the straightforward answer is to rely upon CPR 3.1(3) which allows me to impose a condition for adjourning this hearing and giving the third defendant more time to file its evidence. That condition could be that it is required to produce this evidence. That does not seem to me to be a principled approach. If the documentation is disclosable then by all means a condition could be attached. But unless, apart from CPR 3.1(3) it is appropriate to order that disclosure now, it does not seem to me that it is appropriate to make it as a condition of giving the third defendant proper time to respond to its evidence.

5. I am conscious that at this stage the nature of the claim as between Mr. Hughes and D3 is not clear and it has not been clearly enunciated. I am concerned that making an order for disclosure of documentation is not appropriate when I do not know whether or not that is documentation which would be disclosed when the nature of the claim becomes clear when it is eventually enunciated.

6. If the third defendant chooses, having made those statements, not to produce the evidence which it has referred to, it runs the risk that inferences will be drawn against it by the court. No doubt the claimant will make hay over the fact that we have had this argument at this hearing and so the third defendant is forewarned as to what approach the court may take.

7. So I will leave the disclosure on that footing. It is open to Mr. Hughes, through his team, to make a proper application for disclosure, whether it is to come back before the return date or whether it is to be made at the return date, for that information.

8. Having said all of that, it does seem to me that Mr. Head made representations in his oral submissions at a short notice hearing to the court as to what he said was the position. In the ordinary way, I expect that what counsel has said on instructions at that hearing to be confirmed in evidence which is placed before the court in due course or to be corrected if what he has said is inaccurate. That should be entirely unobjectionable. That is the position in relation to disclosure.

9. In relation to the remaining sticking points of principle, there will be the provision by the claimant of an explanation as to the nature of the counterclaim which he is going to make in the Isle of Man, the relief which is going to be sought and in summary the grounds for that relief. Indeed that explanation will also explain what claims or what relief affecting the second and third defendants will be sought or in some other way will explain how it is that this injunction should be made in relation to the third defendant and the second defendant when they are not parties to the Isle of Man proceedings. What I have just said is not intended to be a a formulation of the wording of the order. That is a matter which, I having expressed the sentiment, I hope you will be able to agree a form of words.

10. So far as the appointment of a receiver is concerned, again, the summary explanation has to explain on what basis a receiver is going to be sought and in support of what claim or head of relief whether in the Isle of Man otherwise. Likewise in relation to any potential unwinding of the sale to SAI, that needs to be explained as part of that summary explanation. I am not looking for, or not directing or proposing a full pleading but there needs to be a clear route map so that the defendants know what it is the claimant says gives them the right to ask for this injunction.

11. That then brings us to the restrictions. In circumstances where the third defendant is not trading and is simply discharging some historic debts – which is what I understand the position to be – notice of expenditure in the ordinary course of business can safely be increased to three days.

12. I am not going to make any directions in relation to the cap on legal fees. That is an application which can be adjourned to the return date at which point some evidence in support of it can be filed and some explanation as to why and on what legal authority the claimant says that a cap should be imposed.

13. That brings us then to the timetable, which we have not debated. I will now consider what the timetable should be in light of what I have just indicated as to the substantive directions. (For continuation of proceedings: please see separate transcript) - - - - - - - - - - -