Colman Coyle recover 100% of investors’ failed investments

Colman Coyle recover 100% of investors’ failed investments

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Howard Colman of Colman Coyle has been acting on behalf of a large group of investors based in numerous countries who sought to recover monies, which they had lost as the result of the failure of a property investment scheme in which they had participated in 2013/14.

The investors advanced monies to fund the development of a property in which they were ultimately to each have a leasehold interest but, unbeknown to them, the property was subject to existing charges. When the holders of those charges exercised their rights, prior to completion of the leases, the leaseholders lost all of their investments.

The amounts of loss varied.  The majority of investors lost in the region of £50,000 each but some lost substantially more up to, in one case, in excess of £1 million!

A group action was commenced against the solicitors who acted for the investors when making the investments, Beech Jones Limited (who are now in liquidation) claiming damages for negligence and breach of contract and also against Whitfields Solicitors, who acted for the Vendor, claiming damages for breach of trust in releasing the deposit monies improperly.

The case was complicated as, not only were there a large number of Claimants who had little or no connection with each other (other than being part of the same investment), but in addition, they were based in a large number of countries throughout the world including USA, Canada, Middle East, Far East, UK and elsewhere.

Some of the Claimants spoke little or no English and a large number had no familiarity with the English Court processes. Additionally, there were restrictions on the ability to use various IT platforms in some of the countries.

Acting for groups of Claimants in this sort of claim is always a challenge but fortunately Howard’s extensive experience in acting for Claimants in group actions proved invaluable in being able to manage the claims and pursue them through the Court processes.

The claims eventually reached the point where a trial of several lead cases was due to take place in November 2020 in the High Court in London.  However, shortly before the trial, Howard was successful in negotiating a multi-million pound settlement with the Defendants which has resulted in the investors recouping all of their original investments and the costs which they incurred in pursuing the claims.

Howard commented, “I am delighted to have been able to achieve an excellent result for so many clients.  This is particularly as, although some of the investors were wealthy, others were not and the losses had affected them significantly. I am also grateful for, and humbled by, some of the lovely comments received from the clients”.

Amongst many emails expressing gratitude, some of the comments, which stand out, include-

I would like to thank you for all the hard work you put in to resolve this matter.  My wife can rest in peace a little more now as she always advised me against the investment”.

And

I would like you to know that this will make so much difference to my life and I am overjoyed.  Your professional work was magnificent.  Thank you so much, nothing short of a miracle”.

Especially for those of us who spend the majority of our time acting for commercial clients, results and comments like these are a great reminder of the positive effect we can have by using our professional expertise to obtain redress for clients, which can have a significant impact on their lives in many ways.

Howard Colman
Howard Colman hosts virtual IR Global meeting with international group of dispute resolution lawyers

Howard Colman hosts virtual IR Global meeting with international group of dispute resolution lawyers

Howard Colman IR Global virtual meeting

As a committee member for the IR Global Disputes Group, Howard Colman hosted a virtual meeting with an international group of dispute resolution lawyers on Thursday 14th May 2020.

The meeting included IR members from North and South America, the Caribbean, Canada, and Europe.

It was a good opportunity to exchange experiences as to how the Covid-19 pandemic is impacting on the judicial process in various jurisdictions and a great way for members to keep in touch even though sadly it is not possible to meet up at present.

Thank you to Ross Nicholls at IR Global for organising and coordinating this Zoom video call.

Cross border trade and Covid-19 issues – applicable law and jurisdiction could be crucial

Cross border trade and Covid-19 issues – applicable law and jurisdiction could be crucial

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As most lawyers with any experience of disputes involving cross border trade contracts will know, the question of which law applies to the contract and, which forum is appropriate for the determination of any dispute, is frequently an issue.

In many cases, businesses do not give any thought to these matters when entering into contracts. Sometimes one or other party will have standard terms and conditions dealing with this but, even then, there may be issues as to whether or not those terms and conditions were incorporated into the contract. This is particularly the case where, as is not uncommon, each party has provided its own set of terms and conditions which make different provisions and there will then be an issue as to whether either or neither of the terms apply.

Whilst this is common in many disputes, often the issue of the applicable law may not be crucial as often the outcome to a dispute may be quite similar irrespective of the applicable law or jurisdiction.

However, it may well be that these issues will now achieve a much higher level of importance in regard to disputes which arise out of the Covid-19 crisis.

We anticipate that there are likely to be many situations where a party fails to perform its contractual obligations and says that is because it has either been prevented or inhibited from doing so because of the effects of the crisis and the restrictions imposed by various governments.

If a party seeks to be relieved from the consequences of what is, prima facie, a default, it will, unless unusually there is an express contractual provision governing the situation, have to fall back on the rights, if any, under the appropriate law.

For many, their first thought will be to try to evoke the concept of ‘force majeure’.

This concept is one which effectively treats the contract as being at an end where an unforeseen circumstance arises and is such that it prevents performance.

However, whilst this term is often spoken of by lay clients, it is important to note that, for example, under English law there is no general concept of force majeure. Often contracts may incorporate a clause dealing with force majeure events but it is purely a matter of contract and the clause will also need to be construed in accordance with the usual rules of contractual interpretation.

This is not the same for many other civil law jurisdictions and the concept of force majeure is, for example, part of the Civil Code in many European countries.

English law has its own concept of frustration of contracts which is governed by statute, the Law Reform (Frustrated Contracts) Act 1943.

Whilst this does relieve parties of their contractual obligations in certain circumstances and, in that respect, might thought to be similar to the concept of force majeure, there are significant differences. Not least a contract would normally only be treated as having been frustrated if it is impossible, as opposed to being nearly substantially more difficult, to perform.

Another example of different concepts that apply in other jurisdiction is that of rebus sic stantibus. Again this concept is common in civil law countries and is commonly found in their Civil Code.

The concept of rebus sic stantibus can apply to relieve a party from its obligations where the performance of those obligations have been made substantially different because of external circumstances such that it is no longer reasonable to insist upon performance.

The above are just some examples of how the applicable law may well affect the decision as to whether or not a party should be relieved from the consequences of failing to perform its obligations due to Covid-19 difficulties.

Additionally, where, and under what regime, the dispute is to be determined may also be of greater significance than previously.

Courts in some countries can be expected to adopt a stricter test as to the duties of parties under contracts. For example, French Courts have a reputation for an extremely strict attitude towards the observance of pacta sunt servanda, or strict compliance with contractual provisions.

Not only will the law itself be relevant but it is likely that the decisions which will be reached will be much more readily susceptible to the attitude of individual Judges in different jurisdictions particularly if some jurisdictions adopt a more liberal attitude to relieving parties from their strict obligations in difficult circumstances.

It may also be that the contractual provisions require the parties to submit disputes for arbitration. If so, then it is even more likely that the position of the arbitral tribunal could have a significant effect on the outcome. In addition, it is important to check whether any arbitral rules that may apply to the particular forum may impact upon the position.

Given the complexity and nuanced differences that might apply, any party finding itself involved in a cross border contractual dispute would be well advised to take advice at an early stage so that it can ascertain how its rights and obligations may be affected by the laws which apply and the jurisdiction in which any dispute would be determined. It would certainly be unwise to assume that the rules which apply in a party’s own jurisdiction will necessarily be the same elsewhere.

Ascertaining the applicable law and jurisdiction may well impact significantly upon the parties’ respective rights and the approach that any party may wish to take to a dispute.

Howard Colman
Coronavirus – what is the position in English law under a lease or other contract if the pandemic affects performance of obligations

Coronavirus – what is the position in English law under a lease or other contract if the pandemic affects performance of obligations

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Apart from the obvious, and in many cases tragic, health effects of the current pandemic, almost every form of business is currently being significantly affected. 

Many businesses are seeking advice as to their rights and obligations where their ability to continue to perform under leases of premises or general commercial contracts has been severely impaired by, or made impossible by, the effects of the virus and/or government imposed restrictions. 

In this article, we will aim to give an overview of the position under English law.  It is however important to stress that whilst we can give general guidance, in this area in particular, each case is likely to turn on its own specific facts and anyone affected will need to take their own advice before acting. 

Force Majeure

Force majeure can be described in general terms as meaning unforeseeable circumstances which prevent someone from fulfilling their contractual obligations.  This term is often referred to by lay clients but it is important to note that unlike many other countries the common law (which applies in England) does not recognise this concept. 

Many countries, particularly in Europe, do have this concept as part of their legal code but the position in England is very different.

Notwithstanding this, many contracts have “force majeure” clauses written in them and where these clauses exist they will be effective, subject to the usual contractual rules. 

As these provisions are purely contractual it is necessary to look at the specific wording of each clause to ascertain whether it covers the particular circumstances that have arisen and, if it does, what remedies or reliefs the contract may provide in those circumstances. 

It is not possible to give any general guidance on these clauses as they will be fact sensitive although there may be some common features where, for example, a standard form of contract such as the JCT Building Contract is used. 

Frustration of Contracts Generally

The stating point under English law is that obligations under a contract are absolute.  This was determined in Paradine v James.  This is a case decided as long ago as 1647 where the Court held that a tenant was still liable to pay the rent on a farm even though he had been evicted by an alien enemy and therefore could no longer make use of the property. 

However, in 1863, in Taylor v Caldwell the Court softened its approach and adopted the concept of ‘frustration’. 

In this case, the Defendants had contracted to allow the Plaintiff to use a music hall for four nights but, before the first night, the hall burnt down in a fire.  The Court held that this meant that the Defendant could not perform its obligations and implied a term that this then excused it from performance so that it was not liable in damages for failing to make the hall available.

The law in this area has continued to evolve and in 1943, the Law Reform (Frustrated Contracts) Act was passed.  This statute helps clarify what happens if a contract is frustrated.  For example, it deals with what happens to money paid before the frustrating event.  It also has provisions dealing with the situation where a party has gained a valuable benefit prior to the contract being frustrated. 

However, whilst the doctrine of frustration may assist in some cases, there are numerous qualifications and exceptions and the rules are not straightforward.

Situations where frustration will not apply include where parties contemplated the frustrating event and agreed how it would be dealt with in their contract or where the event was something that they should have foreseen even if they did not do so. 

Also, frustration would not normally apply if the problem simply makes the contract more difficult or expensive (as opposed to impossible) to perform but, if it makes performance so significantly differently from what the parties originally envisaged it is likely to apply. 

An example of how this might assist in the current crisis would be a situation where a company had contracted to provide travel to an event in a country which has now closed its borders so that it is no longer possible to visit.  Such a situation may well mean that the contract, or its performance, has been frustrated and, if so, will relieve the company from claims for damages (depending upon the contractual and other circumstances). 

Frustration, where it does apply, automatically discharges the parties from their future obligations. 

Frustration and Leases

For a long time there was serious doubt as to whether the doctrine of frustration could apply to a lease of premises.      

However, in National Carriers Ltd v Panalpina (Northern) Ltd [1981] the House of Lords clearly expressed the view that the doctrine could apply to a lease, at least in theory. 

In that case, the Lordships held it would only be in extreme cases that a lease would be terminated on the grounds of frustration and an interruption of 20 months during which the lessee was unable to use the premises was held not be sufficient to frustrate a 10 year lease. 

Since that time, there have been a number of cases in which the Courts have been asked to consider the doctrine of frustration in relation to leases and it is clear that, in each of these, the Court accepted that the doctrine could apply but, as yet, there have been no reported cases in which the Court has actually found that a lease has been frustrated. 

Whilst therefore there may be a glimmer of hope for tenants who are unable to use their premises due to the current crisis, it is very unlikely that they would be able to claim that their lease has been frustrated except in unusual circumstances. 

That said, it is very common, particularly in leases of commercial premises, to have contractual provisions providing for the suspension of payment of rent in certain circumstances (e.g. if the premises are destroyed by fire).  Careful analysis of such clauses may be required to see whether or not they may possibly cover the current situation. 

Conclusion

For contracts generally, if it is impossible to perform because of restrictions arising from the current pandemic or, if performance would be rendered so radically different that it was outside that which the parties had originally contemplated, this may well mean that the contract has been frustrated and the parties will be excused from future performance. 

Whilst this could, in theory, apply to a lease, it will only do so in exceptional circumstances and is unlikely to be of assistance in most cases. 

This area of law is particularly complex and nuanced and anyone facing issues of this nature would be well advised to seek urgent legal advice. 

Howard Colman
IR Global and the art of cooperation

IR Global and the art of cooperation

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Once again the connections which we have formed through our membership of IR Global have been of great help to a client who was engaged in a difficult dispute.   

Howard Colman has been acting for Santiago Montoya, a successful contemporary artist, in a dispute with Halcyon Art International (Halcyon) which, amongst other things, is associated with the well-known Halcyon Gallery in New Bond Street, London. 

Santiago who is Colombian but now based in the United States, entered into a contract with Halcyon several years ago at a time when he was relatively unknown internationally.  Santiago produces unique contemporary art which is thought provoking and is work of an exceptional quality. 

The contract with Halcyon, which is a Hong Kong based company, provided for it to exclusively represent Santiago worldwide and had a number of provisions within it which Santiago considered were unreasonable and unfairly restricted his ability to trade. For example, it provided that Santiago could not sell any of his work except through Halcyon and, if Halcyon rejected any work, Santiago was not free to sell it elsewhere and there were even significant restrictions on his ability to give it away. 

Santiago became of the opinion that the contract was working more and more unfairly against him and so sought advice from Jeremy Wallison of Wallison & Wallison, the IR Global exclusive member for commercial litigation in New York.   

Initially Jeremy engaged with Halcyon and their London lawyers but, when it became apparent that the parties were not going to be able to reach a compromise, Jeremy realised that it was necessary to instruct lawyers in England as the contract provided for the jurisdiction of the English Courts and for English law to apply. 

Jeremy made contact with Howard who is the IR Global exclusive member for commercial litigation and commercial arbitration in England and Howard agreed to take the case on.

It was necessary to serve documents on Halcyon in Hong Kong and yet again the strength of the IR Global membership came to the fore as Howard was able to instruct Kenix Yuen of Gall Solicitors, the IR Global exclusive member for commercial litigation in Hong Kong to assist with this. 

Eventually, Howard commenced proceedings on behalf of Santiago in the High Court in London.  The claim was strenuously defended by Halcyon who also brought a counterclaim against Santiago.  

The proceedings themselves attracted significant media attention, both in magazines and in the national press.   

The case was listed for trial in January 2021 but the parties agreed to attempt to resolve their difficulties in mediation and we are pleased to say that this proved successful and the parties reached a settlement. 

The case is a great illustration of how our membership of IR Global operates not only for our benefit but, also, and perhaps more importantly, for the benefit of our clients, in enabling us to provide high quality representatives internationally to represent them. 

The case is now at an end and Santiago is delighted with the advice and assistance he received from the IR Global members and we wish him all the very best for his future career.  

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Howard Colman and Oksana Howard to attend 2020 IR Global “On the Road” conference in Miami

Howard Colman and Oksana Howard to attend 2020 IR Global “On the Road” conference in Miami

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Following on from the highly successful annual conference of IR Global which took place in Amsterdam in October 2019, Howard Colman and Oksana Howard will be representing Colman Coyle at the IR Global “On the Road” conference in Miami in January 2020.

The “On the Road” conferences are limited to 150 delegates and provide a great opportunity to cement existing relationships and make new ones with leading professionals from around the world.

Colman Coyle’s International Department works with professionals in both North and South America and, particularly with Brexit now having become a reality, sees this as a growing area of business for clients both inbound and outbound.

It has been particularly helpful for our clients for us to be able to introduce them to, and work with, lawyers in various states and Latin American countries who we know personally and are confident will be able to provide a high level of service and advice.

Equally, we have been pleased to be able to assist members and their clients from across the Americas with matters involving English Law.

Howard

Howard Colman

Oksana

Oksana Howard

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