James Woolrich joins Three Stone as a tenant

19 September, 2019

We are delighted to announce that James Woolrich joined Three Stone as a tenant on 9 September 2019.

James originally qualified as a solicitor in 2006 and a solicitor advocate in 2010. During his career in private practice, he has worked at 3 major international law firms, most recently at Jenner & Block LLP, where he was a partner in its London office.

James has a broad commercial practice working for corporate and banking clients, encompassing international arbitration and complex commercial disputes, often with cross-border elements. He has gained substantial experience of applying for post-arbitration award/judgment enforcement measures, and in that connection has dealt with a wide range of applications for relief and related jurisdictional issues.

Prior to being called to the Bar (in July 2019), James was identified in the 2018/19 edition of The Legal 500 as one of its ‘Next Generation Lawyers’ in the Commercial Disputes category and was described as a “great strategist” in its practice write-up for Jenner & Block’s International Arbitration group.

His recent engagements at Jenner & Block included:

  • Acting in ongoing multi-jurisdiction enforcement proceedings on behalf of the award creditor (in England, Cyprus, India and the Isle of Man) in respect of two LCIA arbitration awards now worth over $500m (numerous decisions, including: [2013] EWHC 1323 (Comm), [2013] 2 All ER (Comm) 1137; [2013] EWCA Civ 1512; [2014] EWHC 1323 (Comm); [2014] EWHC 3131 (Comm), [2015] 1 All ER (Comm) 336; [2015] EWHC 467 (Comm); [2014] EWHC 3704, [2015] 1 All ER (Comm) 305; [2015] EWHC 86 (Comm); [2015] EWHC 597 (Comm); Ex.P.132/2014 11 April 2017 (Delhi High Court); CHP/2013/66 4 July 2018 and 4 February 2019 (Isle of Man High Court);
  • Representing an investor in a significant investment treaty claim against an Eastern European State in relation to real estate projects;
  • Advising an Eastern European bank on complex conflict of laws issues arising in relation to a dispute connected to a finance agreement and an apparent fraud;
  • Advising individual defendants to civil claims brought against them by a foreign tax authority in relation to an alleged £1bn withholding tax fraud;
  • Representing an investor in a BVI mining company in relation to:
    • (i) a dispute concerning information-provision obligations and repayment covenants in an Investment Agreement (LCIA Rules, London seat) and
    • (ii) a dispute concerning shareholder rights (BVI Commercial Court);
  • Advising a US defence contractor in relation to a high-value breach of contract dispute (LCIA Rules, London seat).

James said “I am delighted to be joining Three Stone following my transfer to the Bar. The clerking team here is second to none and I look forward to working alongside chambers’ high-quality members.”

Justin Brown (senior clerk) said “I am very pleased that James accepted John McDonnell’s invitation to join us. He has an outstanding reputation, and his existing expertise will be a perfect fit with the work of chambers. I am sure he will be very successful. James joins us shortly after Stephen Woodward, also formerly a partner in a very well-respected firm. We are continuing to receive some excellent applications to join chambers and all I can say is watch this space ….”

James Woolrich

jwoolrich@threestone.law

 


Skandinaviska Enskilda Banken AB v Conway & Anor

22 August, 2019

Skandinaviska Enskilda Banken AB v Conway & Anor (as joint official  liquidators of Weavering Macro Fixed Income Fund Ltd) [2019] UKPC 36 

The Privy Council decision (on appeal from the Court of Appeal, Grand Cayman) that Liquidators of an insolvent open-ended investment company were entitled to recover from a bank those share redemption payments which were unlawful preferences over other creditors pursuant to the Companies Law (2013 Revision) 2013 (Cayman Islands) s.145(1) notwithstanding that the bank had not been enriched but, as a bare trustee, had paid away the money to its beneficiaries.

David Lord Q.C. of ThreeStone appeared (along with Shaun Folpp of Mourants) for the successful Liquidators.

What was the background?

In short, Weavering collapsed in March 2009 when the directors uncovered the fraudulent activities of the Fund’s principal investment manager, Magnus Peterson. At the heart of his fraud, Mr Peterson used fictitious interest rate swaps to give the impression that the Fund was returning steady profits when in reality the swaps had the effect of masking huge trading losses. This was done by attributing significant value to the swaps notwithstanding the fact that they were worthless. Following the collapse of Lehman Brothers in September 2008, a significant number of Weavering’s investors sought to redeem their shares. As a consequence, redemptions totalling US$138.4m, US$54.7m and US$30m became due on each of the 1 December 2008, 2 January 2009 and 2 February 2009 redemption days. As a result of Mr Peterson’s fraud, Weavering was never in a position to meet these redemption obligations, and was rendered hopelessly insolvent. However, rather than suspending redemptions, or otherwise taking steps to cease the Fund’s business, Mr Peterson implemented a policy for the payment of redemptions – albeit only to those investors who redeemed their shares on 1 December 2008, leaving those investors who redeemed on 2 January and 2 February 2009 unpaid. The defendant in these proceedings, SEB, was one of the investors who redeemed their shares on 1 December and who was paid their redemption sums in full.

What did the court decide?

The Board confirmed both decisions below that the redemption sums received by SEB were preference payments, and ought to be repaid to the Fund’s liquidators. In doing so, the Board held:

  1. While Net Asset Values (NAVs) struck prior to a company’s liquidation ordinarily cannot be disturbed or set aside once a company is in liquidation (following the Privy Council’s decision in Fairfield Sentry v Migani [2014] UKPC 9), where those NAVs have been struck as a result of an “internal” fraud they may not be binding and may be liable to be set aside. This is to be contrasted with the position of an “external fraud” where, even if the NAVs are affected by fraud, they will nonetheless be binding. Here, given Magnus Peterson was found to be the controlling mind of the Fund (although he was not a director), the fraud was found to be “internal”.
  2. Where a company’s articles provide that redemption sums are to be paid within a set period of time following a redemption day, the obligation to pay those sums still arises on the redemption day. Reference to a payment period (in this case, a period of 30 days from the relevant redemption day) is simply a reference to a supplementary procedure which does not affect the liability from accruing on the redemption day.
  3. In a preference action, the required “dominant intention to prefer” can be inferred from the evidence by applying general principles of inference.
  4. The relevant provision within the Cayman Island statute in relation to preference only has the effect of avoiding the relevant payment. The cause of action which then accrues is not based on the statute, but rather restitution on the ground of unjust enrichment. However, as a matter of public policy, there can be no change of position defence to a claim brought for the recovery of preference payments.

As an aside, in the Court of Appeal’s decision, below, it held that the cash flow test for insolvency in the Cayman Islands is not confined to consideration of debts that are immediately due and payable, and that it also permits consideration of debts that will become due in the reasonably near future. Given the Board’s conclusion in relation to issue 2 above it was not necessary for the Board to go on to consider this point. The Court of Appeal’s decision thus remains the position as a matter of Cayman Islands law.

What are the practical implications of this decision?

The Board’s decision deals with a number of important principles which have a far reaching affect beyond mere preference payments. However, the two most obvious implications are:

First, given the propensity for investors to invest in Cayman Islands investment funds via custodians or nominees, the lack of a change of position defence will require those who provide these services to ensure the arrangements they have in place with their underlying investors include an ability to recover redemption sums which they receive on behalf of those investors and, in turn, which they pay to them. The defendant in these proceedings, SEB, was itself a custodian. It received the redemption sums from the Fund and, in turn, paid them out to its investors. Unfortunately, the indemnities it had in place with those investors were worthless, meaning SEB, having paid the redemption sums away and being unable to now recover them, will need to re-pay these sums from its own monies.

Second, the Board’s decision to draw a distinction between “internal” and “external” fraud may result in aggrieved investors in funds which have been subject to an internal fraud taking steps to try and set aside previously binding NAVs, with a view to all investors, regardless of whether they sought to redeem their shares or not prior to liquidation, sharing equally in the fund’s available assets.

Ultimately, the decision reinforces the policy behind much of the Cayman Islands’ insolvency regime, which is to restore value to a company for the benefit of its creditors who, in turn, ought to share equally in the distribution of the company’s assets

David Lord Q.C.

dlord@threestone.law

 


Charlotte St Properities Ltd (In Administration), Re Also known as: Conn v Ezair

18 July, 2019

Stephen Leonard Conn, Jonathan Avery-Gee (Joint Administrators of Charlotte Street Properties Limited) v Jacob Azouri Ezair [2019] EWHC 1722 (Ch)

Introduction

The court considered whether admissions made in an earlier witness statement could amount to admissions for the purposes of CPR 14.1, and the circumstances in which such admissions might be withdrawn pursuant to CPR 14.1(5), and PD14, paras 7.1 and 7.2.

Further, the court considered the nature of a purchaser’s and sub-purchaser’s rights under contracts for the sale of land, and the operation of the equitable doctrines of conversion and proprietary estoppel in favour of a sub-purchaser in the light of the decision of the Supreme Court in Southern Pacific Mortgages Ltd v Scott (Mortgage Business plc intervening) [2015] AC 385.

In particular, the court considered the circumstances in which a sub-purchaser might enforce the original contract against the original seller, and thereby secure performance of the sub-contract.

Background

In 1999 the Respondent entered into a contract of sale of his business, including number of properties, to a company that he controlled (NEL). The contract was completed save for the transfer of the properties to NEL which remained in his name to save stamp duty, with the contract providing that NEL could call for a transfer on giving 7 days’ notice.

In 2003 NEL agreed to sell 8 of the properties (“the Properties”) to a company belonging to an off-shore family trust (CSPL) for tax reasons. Again, the contract was completed and the purchase price was paid, save that, again, the Properties remained in the name of the Respondent as legal owner. Thereafter, the Properties were treated as an asset of CSPL in its accounts, and the rents received and expenses incurred in connection went through CSPL’s accounts.

NEL entered into liquidation in 2016, and CSPL entered into administration in 2017. The joint liquidators of NEL and the joint administrators of CSPL are the same individual insolvency practitioners.

The joint administrators of CSPL issue an application against the Respondent under ss. 234 and 236 seeking an order that he execute transfers of the Properties in favour of CSPL. In witness evidence in response, the Respondent admitted that he had held the Properties upon trust for CSPL and that CSPL had been entitled to enforce the 1999 contract, but alleged that he had entered into an agreement with the directors of CSPL in 2016 to acquire the beneficial interest in the Properties – an allegation hotly contested by the joint administrators of CSPL.

It was determined at an earlier hearing of a preliminary issue that the ss.234/236 procedure was potentially available to the joint administrators and not inappropriate.

Shortly before trial, the Respondent abandoned his case with regard to the agreement to acquire the beneficial interest in the Properties, but also sought to resile from his admission that he held the Properties upon trust for CSPL. Relying on Southern Pacific Mortgages v Scott, he argued that NEL had not acquired any proprietary rights under the 1999 contract, and so had not been able to grant any proprietary rights in favour of CSPL that the latter could enforce. On this basis, so he argued, CSPL had no right to specific performance as against the Respondent, and thus no trust in respect of the Properties could arise in favour of CSPL. Further there was no privity of contract as between the Respondent and CSPL. Thus, as the joint administrators could be in no better position CSPL, the joint administrators were not entitled to the relief that they sought.

Decision

The admissions made in the earlier witness statement were admissions falling within CPR 14.1, and applying the criteria in PD14, para 7(2), and it would not be right to allow the Respondent to withdraw his admissions that he held the Properties upon trust for CSPL and that there was a contractual relationship between CSPL and the Respondent following the entry into the 2003 contract. The joint administrators of CSPL would be prejudiced by the Respondent being allowed to withdraw his admission, not least because they would otherwise have easily obtained an assignment from NEL of the latter’s rights under the 1999 contract.

In any event, the effect of the 1999 contract being completed, apart from the transfer of the relevant properties to NEL, was to constitute the Respondent as a bare trustee of the properties the subject matter of the 1999 contract. Likewise, once the 2003 contract was completed apart from the transfer of the legal estate, NEL held on bare sub-trust for CSPL as sub-purchaser with the result that the Respondent, as original seller, could and should act on the directions of CSPL as sub- purchaser in accordance with the principle in Re Lashmar [1891] 1 Ch 258. On this basis CSPL was entitled to call for a transfer of the Properties.

Analysing it slightly different, the authorities demonstrated that a sub-purchaser would be entitled to seek specific performance as against the original seller, essentially stepping the shoes of the original buyer where both the original contract and the sub-contract were specifically enforceable – see e.g. Snell’s equity (33rd edn) 24-003 and Shaw v Foster (1872) LR 5HL 321. Whilst there may be circumstances where it was necessary for the sub-purchaser to join the original purchaser, a claim would not generally fail over the non-joinder of the intermediate party, particularly in a case such as the present where the intermediate party was in support of the claim, and the original seller and the intermediate seller were both bare trustees (because the purchase price had been paid in full).

Whilst Southern Pacific Mortgages v Scott was authority to the effect that the 1999 contract had not conferred any proprietary rights on NEL that it could pass on, this did not matter because CSPL had stepped into the shoes of NEL, and could enforce the 1999 contract.

Further, in the circumstances, given that the Respondent had arranged matters such the Properties were treated as assets belonging beneficially to CPSL (not least for tax reasons), and as not as belonging to himself or NEL, he was estopped from denying that the held the Properties for CPSL beneficially.

The joint administrators were thus entitled to the relief that they sought.

Mark Cawson QC

MCawson@threestone.law


Re AB: Termination of pregnancy

15 July, 2019

Simon Hunter reviews the tragic case of Re AB in which the Court of Appeal overturned the decision of the Court of Protection to permit an NHS Trust to perform an abortion on a 24-year-old woman.

Re AB [2019] EWCOP 26, [2019] EWCA Civ 1215.

The case created headlines around the world, shining a spotlight on the work of the Court of Protection and the difficult decisions that it has to make on a daily basis.

Click here for the full story from Law & Religion UK.

 

Simon Hunter

shunter@threestone.law


Prof. Surya Subedi awarded DCL degree by Oxford University

4 July, 2019

Professor Surya P. Subedi QC

Professor Surya P. Subedi, QC, OBE, a member of Three Stone, has been awarded the degree of Doctor of Civil Law (DCL) by the University of Oxford on the basis of exceptionally insightful and distinctive publications that contain significant and original contributions to the study of law.

Higher doctorates are earned awards of the University of Oxford whose fundamental purpose is to recognise excellence in academic scholarship. The Oxford DCL is awarded in recognition of publications of the absolute highest quality which is substantial in scale, sustained over time, authoritative and global in its reach.

Professor Subedi obtained his PhD in Law (known as DPhil at Oxford) in 1993.

Professor Surya Subedi QC, OBE

subedi@threestone.law


New Tenant for Three Stone following pupillage

11 June, 2019

Chambers is delighted to announce that Stephen Woodward will be taken on as a tenant as of 11 June 2019 following the completion of his pupillage.

Stephen originally qualified as a solicitor in 2002, and as a Chartered Tax Adviser in 2005. He previously worked at Withers LLP and Payne Hicks Beach, where he was a partner in the Private Client department.

Stephen specialises in providing tax advice to individuals, and their families, trusts and businesses. In particular Stephen advises on:

  • Income Tax, Capital Gains Tax, Inheritance Tax and Stamp Duty Land Tax (SDLT);
  • Residence, domicile and the remittance basis of taxation;
  • The taxation of onshore and offshore trusts;
  • Wills and Estates, including cross-border Estates;
  • The taxation of UK real estate;
  • The taxation of privately owned UK businesses including agricultural businesses;
  • The tax efficient structuring of international privately owned businesses, including the use of Private Trust Company structures; and
  • Tax and trust advice to Matrimonial lawyers, both in the context of divorce and pre/post-nuptial agreements.

Stephen was called to the Bar in November 2018.

Stephen Woodward

swoodward@threestone.law


The Disclosure Pilot

26 April, 2019

Most of us have heard by now of the new Disclosure Pilot (“the Pilot”) which came into force on 1 January 2019 and will continue for two years. I had the pleasure of appearing for a party in the first ever hearing under the Pilot, a CCMC on 2 January 2019, in relation to a disputed off-plan sale of a number of developments.

The Pilot is designed to promote timely and more proportionate disclosure and applies to all cases in the Business and Property Courts, regardless of when they started (see para 1.2 of CPR PD51U).

There seems, however, to be some confusion as to whether the Pilot applies to cases in which disclosure orders had been made prior to the Pilot entering into force, as opposed to cases which were simply commenced before then. The prevailing view had been that it did not, based on the following passages from PD51U:

“The pilot shall not disturb an order for disclosure made before [1 January 2019]” (para 1.3 of PD51U)” and

“The pilot does not apply to any proceedings where a disclosure order had been made before it came into force unless that order is set aside or varied” (commentary at CPR Part 51.2.10).

The guidance in 51.2.10 seems quite clear but, in a recent judgment in UTB LLC v Sheffield United & Others [2019] EWHC 914 (Ch), the Chancellor, Lord Justice Vos, clarified that it was wrong:

“The Pilot was deliberately put in place without transitional provisions so that it would apply to all existing proceedings (apart from those specifically excluded) even where an initial disclosure order had been made. It seems to me that the note [at Part 51.2.10] is a misunderstanding of paragraph 1.3 of the Pilot … Plainly, it is one thing to say that a pre-existing order will not be disturbed by the commencement of the Pilot, and quite another to say that the Pilot is not applicable to any proceedings where a disclosure order has already been made. Only the first is correct.

”Somewhat ominously, the Chancellor then emphasised that parties will have to give detailed thought to the new rules under the Pilot and specifically to the way in which these rules would affect any application for extended disclosure. My experience echoes this warning, as, in the case I mentioned above, the other side has been sent away by the court a few times so far by reason of non-compliance with the Pilot. Each time the court provided more guidance and emphasised the need to comply with the Pilot before the case could be progressed.

In respect of further applications for disclosure under the Pilot in cases where disclosure had been ordered pre-January 2019, the Chancellor said that courts would interpret the Pilot in a way that makes it work effectively.

To end on a more positive note, below is a quick reminder of the main disclosure stages under the Pilot, leading up to a disclosure order at the first CMC:

  •  There are 5 models of disclosure under the Pilot, named from A to E. Model A is “no order for disclosure”, Model B is “limited disclosure”, Model C is “request-led search-based disclosure”, Model D is “narrow search-based disclosure” and Model E is “wide search-based disclosure”.
  •  Initially, unless agreed otherwise or too burdensome, parties must provide the key documents they rely on with their pleadings, similar to disclosure in arbitrations. This is called “Initial Disclosure” – if no disclosure is ordered after this (as to which, see below), this corresponds to Model A;
  •  If a party wants disclosure beyond the Initial Disclosure (which they would usually), they need to fill in a number of prescribed forms and engage with the other side on them within prescribed time limits:

(i) Within 28 days of the closure of statements of case, each party must state whether or not it wants “Extended Disclosure” (in order words any model of disclosure other than Model A);

(ii) If one or more parties want Extended Disclosure, the claimant must prepare and serve a draft list of issues for disclosure, within 42 days of the closure of statements of case. This list must be in the “Section 1A” form, which is provided in 51UPD.28. It is worth noting that this form has a typographical error in that it should say “to be completed by defendant [rather than “claimant”] in the penultimate column;

(iii) Form 1A requires the claimant to identify the issues in the case and suggest a model of disclosure for each issue – for example, in a misrepresentation claim, if a party wants disclosure of the e-mails containing the representations, the issue might be phrased as “the wording of the alleged representations” and model C may be suggested for disclosure under this issue;

(iv) The defendant must respond with comments in the relevant columns of form 1A within 14 days after service of the list;

(v) The parties then must seek to discuss and agree the draft list of issues and the model for each;

(vi) Any party proposing model C for any issue must complete, within 28 days from when the defendant responded to form 1A, the “Section 1B” form, which is provided at 51UPD.30;

(vii) Form 1B is meant to provide a shopping list of documents or categories of documents sought under each issue;

(viii) No later than 14 days before the first CMC, the parties must fill in the “data mapping” questionnaire in the “Section 2” form, which is provided at 51UPD.32;

(ix) No later than 5 days before the first CMC, the claimant must file a single joint Disclosure Review Document (“DRD”), which is formed of sections 1A, 1B and 2 put together.

(x) As soon as practicable thereafter and in any event before the first CMC, the parties must each file a Certificate of Compliance in the from at 51UPD.34, which contains a statement of truth in relation to the DRD and a confirmation that the parties are aware of their duties under the Pilot.

Daria Gleyze

DariaGleyze@threestone.law


Daria Gleyze wins scholarship for Florida advocacy course

21 March, 2019

Daria Gleyze has won a scholarship from the South Eastern Circuit for their annual Florida advocacy course.

The South Eastern Circuit 2019 Advanced Civil Trial Advocacy Program is held at the University of Florida, Gainesville. The course is based on a complex civil trial and is designed to provide in-depth, demonstration-based instruction of trial advocacy techniques through performance, critique and video review. The training is provided with the assistance of Gavin Mansfield QC and US judges and attorneys.

Four scholarships are available for junior members of the South Eastern Circuit of up to seven years’ Call.

Click here for a full description of the scholarship


A Public Lecture at the London School of Economics

22 January, 2019

Professor and Barrister Surya P. Subedi, QC, OBE, has been invited to deliver a public lecture on ‘Human Rights and Constitutionalism in Nepal’ at the London School of Economics and Political Science on 13 February 2019 at 6 pm. Registration is mandatory to attend the lecture.

In recent years, Nepal has gone through its share of tragedies. It has experimented with liberalism and communism, and adopted an ambitious Constitution designed to usher the country from a Monarchy to a Republic, and from a unitary system to a federal structure. The Constitution enshrines a long list of rights, and the country has ratified most major international human rights treaties.

However, the question that arises is: how democratic is this Constitution, and is it robust enough to guarantee basic freedoms such as the freedom of speech? These are the questions that Professor Subedi will address in his lecture.


Daria Gleyze awarded “Pro Bono Employed Barrister of the Year”

10 December, 2018

Daria Gleyze has been awarded “Pro Bono Employed Barrister of the Year 2018”.

Daria’s clients have praised her “above-and-beyond service”, her work helping them understand the process and providing personal support whenever possible.

“She was a vital instrument by assisting in protecting the rights of a tenant, which I am certain left an imprint on the opposite party. Ms Gleyze is an excellent representative of the Law” Pro bono client in a landlord and tenant matter.

There were nine categories up for nomination and a star-studded judging panel, which included the Lord Chief Justice, Chair of the Bar and the elusive Secret Barrister.

This year’s awards were expanded beyond the one Bar Pro Bono Award which has been presented to a barrister each year since 1997, in order to recognise the wider contribution barristers and chambers make to providing free legal advice and advocacy to the most vulnerable in society.

The award categories were:

• Young Pro Bono Barrister of the Year, sponsored by Place Campbell

• Junior Pro Bono Barrister of the Year, sponsored by Juriosity, the Legal Knowledge Network

• Pro Bono QC of the Year, sponsored by Judicial & Silk (formerly JSB Judicial)

• International Pro Bono Barrister of the Year

• Employed Pro Bono Barrister of the Year

• Pro Bono Chambers’ Staff Member of the Year, sponsored by the Legal Practice Management Association

• Pro Bono Innovation of the Year, sponsored by Lexis Nexis

• Pro Bono Chambers of the Year

• Lifetime Achievement in Pro Bono

The awards were hosted at the historic Fleet Street bank Child & Co on 24 October 2018.

Click here for Daria’s full interview with Counsel magazine.


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