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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hinchcliffe v HSBC Plc & Anor [2002] EWCA Civ 1165 (5 July 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1165.html Cite as: [2002] EWCA Civ 1165

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LEEDS DISTRICT REGISTRY
(His Honour Judge McGonigal)

		Royal Courts of Justice Strand London WC2 Friday, 5th July 2002

1. LORD JUSTICE MUMMERY: This is an application for permission to appeal. The application is made by Mr. Gordon Hinchcliffe in person. There attended with him a Mr. Threltrew from a firm of accountants in Leeds, Urquhart Warner Myers, who have been appointed forensic accountants in relation to the dispute between Mr. Hinchcliffe and the defendants to these proceedings, HSBC Plc and Mr. Tony Thornbury. The purpose of Mr. Threltrew attending was not to represent Mr. Hinchcliffe but to help him in his explanation to the court of why certain documents were required to enable them to carry out their function as forensic accountants.
2. Mr. Hinchcliffe has explained what the background is to this application, and he has produced to the court a bundle of documents which provide some (but I think only a partial) explanation of what is a long and complicated dispute. I only have to deal with one aspect of this dispute today. That is the refusal of His Honour Judge McGonigal on 24th January 2002 to order the disclosure of certain documents which Mr. Hinchcliffe was asking should be disclosed by the defendant bank and Mr. Thornbury. The judge made an order on 24th January dismissing Mr Hinchcliffe's applications of 20th December 2001 and 15th January 2002. Orders for costs were made against him on the application of both defendants.
3. That order was made by the judge in exercise of his case management powers in a piece of litigation current between Mr. Hinchcliffe, the bank and Mr. Thornbury. Those proceedings started in February 2000. There are in the file some particulars of claim, from which it appears that the claim against these defendants arose in this way. Mr. Hinchcliffe was the managing director and majority shareholder in a company called Nortile Distributors Limited. They were importers, wholesalers and distributors of ceramic tiles. They owned freehold properties, one in Leeds and one in Newcastle. They borrowed money from the bank. The bank required security for the loans. The security was by way of charges and it was also by way of a personal guarantee given by Mr. Hinchcliffe to the bank in January 1993.
4. At some point between October 1992 and February 1994 Mr. Thornbury was involved in the affairs of Nortile Distributors as some sort of management consultant exercising authority over the company's bank accounts, accounting books and records.
5. The basis of the claim is, according to Mr. Hinchcliffe, that in late 1993 the bank and Mr. Thornbury determined that Mr. Hinchcliffe should sell his shares in Nortile which, although he was not willing to do so, he did. On 25th February 1994 he entered into an agreement to sell his shares to a competing company, South Yorkshire Tiles Co Ltd, for the sum of £279,000. A large part of that was put in the bank, in reduction, it was said, of the indebtedness of Mr. Hinchcliffe to Nortile. Mr Hinchcliffe's complaint is that he did not willingly sell the shares. They were sold at an under value without any professional valuation of the shares or of Nortile's freehold properties, and in the circumstances the bank and Mr. Thornbury acted in breach of their duties to him and were parties to a conspiracy, forcing him to sell his shares by unlawful means.
6. The proceedings had at some stage been publicly funded. According to a letter which Mr Hinchcliffe handed to me this afternoon, dated 13th February 2002, sent to him at home, he had been legally aided, but his case was considered by the Funding Review Committee. They decided that the certificate of funding should remain discharged as counsel's opinion was clear and was unfavourable. They refused his request to reinstate the certificate in order to request information for provision to the accountants, noting that this had been refused in other proceedings, and they considered it likely that his similar request would also be refused. It was pointed out to him that there was no further right of review against this decision. The Legal Services Commission were right in their forecast about the result of Mr Hinchcliffe's application for documents because that was what was refused by His Honour Judge McGonigal. I have a transcript of the hearing which took place in the Court House at Leeds on 18th January 2002, at which Mr. Hinchcliffe appeared in person and Mr. Payne appeared for the bank and Mr. Rogers for Mr. Thornbury. Although the discussion does not seem to have culminated in any judgment by the judge explaining why he was refusing the application, it is possible to get the drift of the judge's thinking from the transcript and therefore to understand the basis of his order dismissing Mr. Hinchcliffe's discovery applications.
7. The documents which Mr. Hinchcliffe is after are the bank statements for the current accounts of Nortile Distributors Limited with the bank during the period 1991 through to February 1994. The basis of his application is that further disclosure of these documents is needed for the accountants, who I have already identified, to complete the forensic accounting work on the case. Mr. Threltrew and Mr. Hinchcliffe have explained that these documents are needed in order to see what money went into the accounts and what money went out of the accounts in an attempt to find out where the company money has gone. I pointed out to Mr. Hinchcliffe and Mr. Threltrew that it seemed to me that it was far more relevant to have the accounts of the company (that is the audited accounts) in order to show what the profits and losses and assets and liabilities of the company were, because that is the principal information on which it is normally possible to ascertain the value of shares in the company. I was told by Mr. Hinchcliffe that no such accounts are available because over a number of years he refused to sign the accounts, taking the view that they did not accurately reflect the state of the company's finances. Mr. Hinchcliffe has complained in the documents placed before me that the judge in Leeds has in his view formed an adverse opinion on the merits of Mr. Hinchcliffe's case.
8. I have to ask myself in these circumstances: is there a real prospect of this appeal succeeding? There is a real obstacle in the way of this appeal succeeding. It is this. The management of the case is in the hands of the judge in Leeds. He has a wide discretion to decide how to manage it. That includes deciding whether it is necessary for the purposes of the proceedings to order one party to produce or disclose documents to the other side. It is clear from the transcript that Judge McGonigal formed the view, after hearing Mr. Hinchcliffe and the two representatives of the defendants, that he was not satisfied that these documents were required. I can see that these documents would be relevant in any case where there were claims against other parties relating to improper payments out of the accounts. This is not such a case. The only issue in this case, as it is presently framed, relates to the valuation of the shares. The fact is that Mr. Hinchcliffe, though apparently unwilling to do so, signed an agreement for the sale of the shares at £279,000. He can only succeed in his claim against the defendants if he can prove that the shares were worth more than that and the date (this is the crucial point) at which those shares require to be valued is 1994, not 1991, 1992, or 1993. The shares are valued as at the date when they are disposed of, not at some earlier date. I can understand that in a case, differently framed, these bank statements and accounts might be relevant in order to trace money, which has gone out of an account, or in order to demonstrate that money has gone into an account which would have made the company better off and its shares worth more. But at the moment I cannot see, from the way the case is pleaded, that it was wrong of the judge to refuse the disclosure of the accounts for the long period 1991 to February 1994. It appears to me that the matter may need to be reconsidered in the light of proper legal advice given to Mr. Hinchcliffe as to what issue these accounts would be relevant to at the moment. I cannot understand their relevance to the valuation of the shares as at February 1994.
9. I have already pointed out to Mr Hinchcliffe a number of times that he really does need legal advice. I appreciate his difficulty in the lack of funds to pay lawyers to advise him and in his current situation of having had his legal aid funding discharged on the basis of counsel's unfavourable opinion. That is an unfortunate fact of litigation. The Legal Services Commission require counsel's opinion as to what are the prospects of succeeding in the litigation in order to satisfy themselves that public funding should be made available to a litigant. The position, as I have summarised it, is that Mr. Hinchcliffe has not been given a favourable opinion as to his case. For all these reasons I think it would be difficult for Mr. Hinchcliffe to persuade the full Court of Appeal that there was a legal error or misdirection on the part of the judge in Leeds in refusing to exercise his discretion to order the disclosure of the documents sought in his applications. I do not think that there is a real prospect of this appeal succeeding, and I therefore refuse the application.
10. I am aware that Mr. Hinchcliffe will be disappointed at this. He has told me a number of detailed facts about the unfortunate circumstances in which he lost control of his company. He may, for all I know, have arguable claims against these defendants or against other people. All I am saying at the moment is that he has not got a reasonably arguable case on this particular appeal against the refusal to order disclosure of the documents which he requested. The application is dismissed.
Order: Application refused.