Neutral Citation Number: [2013] EWHC 3373 (Ch) 

Case No: HC13B00958
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane
London EC4

Date: 4 November 2013

Before:
MR DANIEL ALEXANDER QC
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Sitting as a Deputy Judge of the Chancery Division
Between:-
(1)	IAIN LAWRIE SHEARER
(2)	JAMES RICHARD DEBRUYKER DAWES
(3)	CAPITAL CASH LIMITED
(4)	JADE INVESTMENTS WORLDWIDE LIMITED
Claimants
and
SPRING CAPITAL LIMITED
First Defendant
(a) TENON PENSION TRUSTEES LIMITED and
(b) RODERICK CHARLES THOMAS
as trustees of THE TENON GROUP SIPP – RC THOMAS TGS0057
Second Defendants

(a) TENON PENSION TRUSTEES LIMITED and 
(b) STUART JAMES THOMAS
as trustees of THE TENON GROUP SIPP – MR SJ THOMAS TGS0059
Third Defendants

			
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Mr Edward Francis (instructed byEdwin Coe) for theClaimants
Mr James Aldridge (instructed by Harbottle& Lewis) for the Defendants
Hearing date: 29 October 2013

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Approved Judgment
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I direct that, pursuant to CPR PD39A para 6.1, no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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Daniel Alexander QC

Daniel Alexander QC:
INTRODUCTION
1.	I gave judgment on 17 October 2013 [2013] EWHC 3148 (Ch) in which I granted the claimants’ application for an interim injunction and dismissed the first defendant’s application to strike out certain paragraphs of the Details of Claim which rely on an alleged tender of the sum owing on 12 February 2013 and I refused summary judgment in respect of them.
2.	In that judgment, I held that the claimants’ pleadings were not so devoid of merit on the tender point that it would be right to strike them out at this stage and held that, in so far as they raised issues of law, those were best determined against the background of fully found facts.  
3.	I dealt with each of the arguments advanced as to why the tender was plainly invalid and explained why, in my view, they raised an arguable case. In the light of my conclusions on the tender arguments, I considered that it was appropriate for an interim injunction to be granted restraining the enforcement of certain security pending trial but held that the cross-undertaking should be fortified by appropriate security. 
Issues arising out of the judgment
4.	There are three issues arising out of that main judgment: (i) fortification of security (ii) costs and (iii) permission to appeal. These points alone took about ½ day to argue, partly because no skeleton or draft grounds of appeal were provided by the first defendant, necessitating more extended oral argument in court.
5.	The parties have substantially agreed directions to trial. Given the time at which argument concluded, it made more sense to put my decision on all the disputed matters in writing.
FORTIFICATION OF THE CROSS-UNDERTAKING IN DAMAGES
6.	The parties have agreed an order in relation to the injunction point which provides for both parties giving undertakings.  In the case of the claimants, a cross-undertaking in damages is proffered on behalf of the first, second and fourth claimants. 
7.	In addition, the claimants propose that the charges over the first and second claimant’s shares in the third claimant (Capital Cash Limited) would stand charged as security for the above undertaking and that the first and second claimants will forthwith enter into deeds of variation of their respective charges so to provide.  The third claimant operates a money lending business with a number of retail shops in the UK and the vast majority of the third claimant’s shares are owned by the first and second claimants.
8.	The first defendant contends that this is insufficient and that it would be preferable for a charge to be granted in respect of such damages over certain Docklands property (Title No. EGL467123) which is already subject to a charge in favour of the first defendant as a result of the Standstill Agreement referred to in the main judgment.  The first defendant contends, in particular, that the value of the third claimant’s shares is uncertain, given the basis of valuation.  
Valuation of security
9.	Mr Thomas has raised a number of doubts about this valuation in his evidence.  Moreover, the OFT appears to have indicated, in 2012, by way of a “Minded to Revoke” notice that the third claimant’s consumer credit licence might be put in jeopardy, although I am told that this has not in the event happened and appropriate undertakings have been given which may make that unlikely. 
10.	Mr Shearer on the other hand has given evidence, supported by valuations from independent professionals, of the value of the shares over which security is offered. That valuation is approximately £3.7 million.  One of these valuations is given by Mr Stephen Brown a Chartered Accountant and corporate partner in RSM Tenon with 25 years experience in valuation work. His letter of 27 September 2013 concludes by saying that he regards the directors’ valuation of £3.694 million to be a “fair reflection of Fair Value of the Shares”. 
Likely damages
11.	The claimants contend that it is for the first defendant to show, in circumstances such as these, what damage it is likely to suffer and that it is such that the security offered is likely to be insufficient. That may be right in certain cases, but the first defendant contends, with some justification, that it cannot point to specific losses at this stage because there may be investment opportunities missed during the period of the undertakings which are not possible to predict at this stage. There is, however, force in the claimants’ contention that opportunities to earn better than a relatively well-secured risk-free 35% compound interest in the period between now and trial are likely to be limited.    
12.	The basic outstanding loan plus any interest pending trial is in my judgment already likely to be reasonably well secured by the combination of charges, even excluding the shares in the third claimant. Although I cannot make a definitive determination now of the value of those shares, on the basis of the evidence as a whole they are likely to provide ample security for any realistic damages which may be ordered on a cross-undertaking.  
Other considerations
13.	The claimants are concerned that a charge over the Docklands land in respect of a claim for an un-quantified sum in damages sought by the first defendant would provide an opportunity for the first defendant to put unfair pressure on the claimants should they wish to dispose of or develop that land. The first defendant denies that this would even be possible, since the land could, in any event, be sold provided that the money was held secure.
14.	As I said in the main judgment, there is potential in this kind of case for profitable tender gaming of various kinds (some of it, possibly, afforded by the legal process itself). The history between the parties, including the considerable delay by the defendants in releasing the security in respect of the SIPPs loans, suggests that opportunities for additional security gaming involving that process should be minimised if possible.  
15.	Finally, it was said that a charge in respect of damages over the shares in the third claimants’ shares would or might itself limit the ability of the claimants to proceed in the manner proposed by the first defendant in a recent letter from Harbottle and Lewis of 24 October 2013. I cannot determine whether that is so but the claimants have continued to offer security over the shares in the third claimant knowing of that proposal, so I do not think this can be a fatal objection to it.
Conclusion on fortification of cross-undertaking
16.	All of these considerations suggest that, for the time being at least, the claimants’ proposal for fortification provides sufficient security.  That is re-inforced by the fact that the order provides for either side to apply to court for variation of the respective undertakings inter alia to adjust the security. 
17.	I therefore accept the claimants’ proposed undertakings and invite the parties to draw up orders reflecting this judgment and the small amendments to the draft directions discussed in court.

COSTS
18.	I indicated in the main judgment that I thought that the appropriate order was for the costs of these applications to be costs in the case.  The claimants contend that this would be wrong and say that they should have all of their costs.  The first defendant contends that costs in the case would be the right order.
19.	CPR Rule 44.2 provides:
(1) The court has discretion as to –

(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.

(2) If the court decides to make an order about costs –

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.

20.	The claimants refer to Berezovsky v. Abramovich [2011] EWCA Civ 153 and, as to costs, [2011] EWCA Civ 484 where the Court of Appeal re-affirmed the general rule that where a party loses a strike out application as a matter of principle it should pay the other side’s costs.  The applications in that case lasted several days, although both Sir Antony Colman and the Court of Appeal decided it should proceed to trial.  The Court of Appeal referred to the discretion of the court when it came to costs being “ample”. 
21.	In my judgment, this is a case in which the general approach should be the starting point but that it should not, especially in the light of CPR rule 44(2)(b), operate as a straightjacket. In this case, there are particular reasons for some departure from the general approach to reflect the nature, degree and circumstances of the claimants’ success.  They are as follows.
22.	First, in this case there is likely to be a very significant overlap between the evidence to be given at trial and the evidence provided for this application. A trial will provide an opportunity to add to the evidence in important respects and for the evidence to be tested but a significant amount of work for the trial has been done on this application on the parties’ evidence, probably more so than in many summary determinations.  Here, the parties’ evidence can, in large measure, stand as those witnesses’ respective written evidence in chief, suitably updated.
23.	Second, a considerable amount of the legal analysis at trial is likely to follow some of the arguments canvassed at this stage, depending on how the evidence comes out. So the preparation of the argument for this hearing will not have been wasteful.  
24.	Third, this application has helped both sides to refine and focus their positions and arguments for trial, giving rise to substantive points and adjustments to the procedural framework which will involve both sides, and in particular the claimants, pleading their contentions out more fully.  But for the argument on the applications, this may not have happened.
25.	Fourth, although the claimants have defeated the strike out and summary judgment application they have done so, in part, on the basis of evidence served comparatively late in the day, which backed the contentions that the money to pay off the debt would have been available.  It is true that the service of this evidence did not prompt the first defendant to drop the application or its resistance to the injunction. Nor was that evidence absolutely critical.  Nonetheless, I think it is right, in this case, to have regard to this matter, just as it can be right to have regard in appropriate circumstances to a late proffered amendment which saves a case from being struck out.
26.	Fifth, argument on the strike out/summary judgment application covered in substance the same ground as the bulk of the argument on the application for an interim injunction. It is not uncommon for costs of a successful interim injunction application to be a claimant’s costs in the case rather than an unqualified order in favour of a claimant.
27.	Sixth, while the claimants have been successful, they have been required to provide fortification of the cross-undertaking which was not initially proffered. Although the hearing would have been shorter had that been the only issue, I am not persuaded, having seen the extensive correspondence and various positions of the parties, that it would have been possible to avoid a hearing altogether, even if this had been the only dispute, partly because the parties are, to some degree, jockeying for position as regards re-inforcement of security. 
28.	Equally, a hearing could well have been required on revised directions in any event, which would probably have resulted in an order for costs in the case.  
29.	Seventh, if the claimants lose at trial on the issue of tender, it would, in my judgment, not be right to require them to pay the first defendant’s costs of arguing, at this interim stage, about whether there should have been a trial of that issue at all, when the defendant was unjustifiably objecting to such. On the other side, the claimants’ costs of these applications, although significant, are not exceptionally large and I am not satisfied that there would be any undue prejudice in the claimants being somewhat delayed in receiving them, if they ultimately succeeded on the issue of tender.
30.	For all these reasons, I agree with the claimants that an order for costs in cause would insufficiently reflect their success. On the other hand, an order entirely in their favour at this stage would not adequately reflect the nature and circumstances of their success. In the circumstances of this case, there is justification for departing somewhat from the general approach to do justice overall. I also have regard to the fact that the Court of Appeal in the Berezovsky costs judgment suggested at [10] that some judges might wish to reflect a losing party’s modest success by making a different order than the standard approach. It can therefore be right to reflect the fact that a winning party has adjusted, or proposes to adjust, its position to some degree, whether in evidence or in argument, as matters have developed.
Conclusion on costs
31.	Taking all of those matters into consideration, I will order that the costs of both these applications shall be the claimants’ costs in the issue of the validity of the tender.   

PERMISSION TO APPEAL
32.	I indicated at the conclusion of argument that permission to appeal would be refused and that reasons would follow.  These are the reasons.
33.	CPR 52(5) provides that permission to appeal may only be given where the court considers that an appeal would have a real (i.e. not fanciful) prospect of success or if there is some other compelling reason why an appeal should be heard. The only ground relied on is the former.
34.	My main judgment decides that the pleading of tender in this case raises properly arguable questions of law and fact which should be determined at trial and which cannot fairly be summarily resolved.  I gave detailed reasons for my view.
35.	It is not really disputed that these claimants were highly motivated to discharge the debt, took a number of steps to raise the money to do so and, prior to tendering it, had procured that the sum which had recently been demanded by the first defendant plus interest should be provided to their solicitors for that purpose where it remains. It is true that the formalities of release documentation which were the key to the payment of the money had not all been sorted out in advance of tender and payment would have been conditional in fact upon release of at least some securities but one of the main questions in this case is how much that really matters in fact and in law.   
36.	An underlying question in this case is: which side is gaming the tender rules.  Is it the claimants: by raising money out of the very security for the loan and therefore only in a position to provide it on condition that the security will be simultaneously released but then tendering without providing advance notice of the release documents?  The claimants strenuously deny that they are in the wrong. Or is it the first defendant: by throwing unreasonable obstacles in the road to redemption? The first defendant strenuously denies that it is in the wrong. These are precisely the kinds of questions which require trial to determine justly to both sides, including consideration of the nature of the tender rules in the specific factual context.  One cannot, in a case of this kind, fairly look only at one side of the coin.
First defendant’s submissions on permission
37.	The first defendant submitted, essentially for the same reasons as submitted at the main hearing, that its argument was right under each of the various heads and that it was arguable that the Court of Appeal might agree that the tender was plainly bad. It is therefore unnecessary to deal with its points in detail here since they essentially covered the same ground as previously argued.
38.	It was submitted that the judgment fell into error in its evaluation of the law as to whether the money in this case was “available” partly because the new lenders had not at the date of tender made their position clear in relation to the release documentation. It was also submitted that the judgment was in error or at least arguably in error as to whether the tender letter was in fact conditional and, if unconditional, it was said that the tender was plainly invalid since the sum was not paid when a demand was made for it (albeit without any preparedness at that stage to provide simultaneous releases). It was submitted that there was a real prospect that the Court of Appeal would consider, on the basis of the construction point alone, that the tender could not be valid and that this required no further facts to be found.  It was also submitted that there was a real prospect that the Court of Appeal might find that the requirements of the law relating to tender were sufficiently strict as to (for example) the provision of draft releases in advance of actual tender that, on the basis of the unchallenged facts as to what happened, it was invalid.  
39.	A number of similar submissions were made in relation to the other arguments such as actual availability of the funds. It is clear from the judgment and those submissions that, although logically separable, the points that arise in the case interlock factually and legally, especially as regards conditionality of tender and availability of money.
Discussion
40.	As I indicated in the judgment, the trial judge and, ultimately, the Court of Appeal might agree with the first defendant’s submissions as to the strictness of the formalities and their application.
41.	However, this is not a judgment on a trial or a trial of a preliminary issue of fact or law. It is an application to strike out/summary judgment. The test is not whether one party is right or wrong but whether the case sought to be determined summarily is so devoid of merit that a trial of that issue would be pointless. 
42.	The underlying basis of my judgment, as I made clear in several places, was that the court should be in a position to evaluate the points in the light of a properly determined set of facts and after proper argument, not in the abstract or summarily. That is all the more so where the points are not easily separable. 
43.	That is an orthodox approach to the determination of summary judgment/strike out applications, where the points raise issues of mixed fact and law.  Again, it is all the more so, where both the law, and the approach that the law should take to the strictness of the requirements of the formalities of tender, have not been clearly articulated or analysed in the cases. Neither side suggests that the principles which are said to determine the case have received any recent judicial attention. Partly because there are so few cases in this area (the last English one which really addressed the points being over 50 years ago) it is more important that those rare cases which provide an opportunity for the law to be properly considered should be dealt with properly, not by the route of strike out or summary judgment.  
Authorities
44.	The approach to summary judgment and strike out applications in Hughes [2004] EWCA Civ 266, Mentmore [2010] EWCA Civ 761 and Doncaster [2006] EWCA Civ 661 cited in the main judgment requires a particularly high degree of confidence that a point is without merit before summary disposal.  A trial is the normal way in which legal disputes are resolved. Summary determination, whether by way of strike out or summary judgment, is only suitable for cases where it is clear that the trial of a point would be of no value because the point is self-evidently bad.
45.	Applying the test from the authorities, I see no real possibility of the Court of Appeal saying that this is a case in which the court can or should at this stage be certain that the points are without merit before a trial. 
46.	In particular, I see no real prospect of the Court of Appeal holding that the allegation of validity of tender is bound to fail in these circumstances, regardless of any further consideration and/or factual investigation at trial of the kind I adumbrated in my judgment.
47.	Finally, it seems to me relevant that there are potential arguments that the claimants have indicated they may wish to make and which were foreshadowed in judgment and argument as to the validity of the tender from a later date than 12 February 2013. Those are to be the subject of proposed amended pleadings. They may well require determination in any event, especially since the claimants expressly made it clear that the tender remained open for acceptance at a later stage.I am satisfied that the Court of Appeal would not regard a trial on the issue of validity of tender as pointless in this case, particularly since a trial of other issues between the parties on the sum owing is to take place in any event.
48.	For all these reasons, an appeal on strike out/summary judgment would stand no real prospect of success.  The same points apply to the application for the interim injunction which was resisted principally on the basis that the tender point was unarguable.
49.	In refusing permission to appeal, I am applying the criteria in CPR 52. However in Hughes the Court of Appeal said at [33] that the Court of Appeal 
“...cannot interfere with the exercise of discretion by the judge to refuse to strike out or dismiss the action unless the judge has erred in law or taken into account irrelevant matters or left out of account relevant matters or otherwise has gone plainly wrong”.  
50.	In so far as the issue is one of discretion, I am not persuaded by the first defendant’s submissions on this application that I have erred in law or taken into account matters I should not have taken into account. Nor, making all due allowances, am I persuaded that I was plainly wrong to say that there should be a trial of the tender issue in this case.  
Conclusion on permission to appeal
51.	For the reasons given,permission to appeal is refused.
Practical consequences of an interim appeal
52.	Although they do not form part of my reasoning, I wish to mention three practical consequences of an appeal at this stage in case the Court of Appeal considers them to be relevant.  
53.	First, an appeal now would give rise to a high risk of two appeals covering much the same ground: one to decide whether the case of tender can go to trial, and a second, after trial, if the Court of Appeal upholds the judgment and also considers that the case raises triable issues. 
54.	That would be a waste of the parties’ and judicial resources, contrary to the overriding objective in the CPR. 
55.	Second, it was indicated before me that an appeal to the Court of Appeal on the tender point may derail the timetable to trial.Neither side in this case has unlimited resources to spend on litigation or would be advantaged by so doing. To the contrary, in a case where it is said on one side that interest is running at some £20,000 a week, there is every reason for dealing with the case finally and fully as quickly as possible.The law reports are full of cases in which interim appeals on sub-points have delayed final resolution as well as increasing the costs. One example is the Berezovskycase cited above.  In my view, in this case, an interim appeal is much more likely to be a source of injustice and expense than a source of economy.   
56.	Third, determination of this issue before me required reading nearly 50 pages of skeleton, nearly 150 pages of core documents in a total bundle of 2000, 6 detailed witness statements and 18 fact-sensitive authorities, spanning 250 years in time and the Commonwealth in space, in an area where the cases have been said to conflict. Argument on permission to appeal alone took about an hour. The Court of Appeal may think that the main judgment is too long but it is an attempt, in a relatively short time, to reflect the arguments, nuances and consequences reasonably fairly in an area where fundamental differences of judicial approach are not unknown (see e.g.Cukurova). 
57.	There is a significant likelihood that, if an interim appeal went ahead, more time, cost and judicial resources would have been spent in arguing about whether there should be a trial of the tender issue than in actually determining it once and for all. To my mind, that would not make a positive contribution to the efficient administration of justice. 
58.	Given that and the attendant delays in final resolution of the case, to the real disadvantage of the parties, the Court of Appeal should be able to decide for itself whether this case requires its attention now or only after trial in the usual way.