HT-2023-000016 - [2024] EWHC 1825 (TCC)

In addition to the way in which the case was put in the witness statement in support of the disclosure application, Henry put its case on the relevance of this Advice in a number of ways including that there was a material misrepresentation of fact as to the content of counsel’s Advice, that the adjudicator relied on that representation, and that that was a ground for not enforcing his decision.

In principle, in my judgment, the only basis on which these matters could assist Henry would be if they were sufficient to give rise to an arguable defence that the decision was procured by fraud. Having seen the full Advice, that was indeed the submission that Mr Halkerston made. Having set out the matters omitted in the summary (which are considered further below) and referring again to the e-mail of 25 May 2022, he submitted that these matters clearly met the threshold in PBS Energo v Bester Generacion [2020] EWCA Civ 404 at [22(c)] - that “the evidence on which the adjudicator has relied is shown to be both material and arguably fraudulent” – for resisting enforcement. As he put it, they showed that a deliberate decision was made to provide select parts of an opinion and present them as counsel’s unequivocal opinion when no such opinion had been given.

The difficulty with this submission, even if there were some misrepresentation of counsel’s Advice, is that counsel’s advice is not evidence and, by definition, not evidence relied on by the adjudicator. It is not, of course, suggested that counsel’s Advice was fraudulent but rather that ProMep’s statement as to what counsel had advised was, or was at least arguably, fraudulent.

Although a representation that counsel has given particular advice is, in a literal sense, a representation of fact, for the reasons I explain below, it is more akin to a representation as to the law, and a flawed statement of law made by a party in an adjudication would not be a reason that the decision was unenforceable since the decision on the applicable law would be a matter within the jurisdiction of the adjudicator.

I say that this is more akin to a statement of law because it is a common practice to include in submissions in an adjudication an open Advice from counsel. It is a mechanism or technique to put arguments before the adjudicator as if they were submissions from counsel and with the intention and hope that the arguments will carry some weight with the adjudicator as the views of counsel. This was a technique adopted by both parties to this adjudication. Even if ProMep’s summary of counsel’s Advice was inaccurate and partial, it was made clear that it was ProMep’s understanding of the Advice and that was a matter which the adjudicator could take account of in deciding what, if any, reliance to place on the summary. Any adjudicator faced with two conflicting opinions from counsel would be expected to form his own view and reach his own decision on the issue – all the more so when the adjudicator is an experienced lawyer. The nature of the reliance of an adjudicator, or other tribunal, on legal submissions is that they provide the tribunal with an articulation and exposition of the competing legal arguments which the tribunal has to consider. The nature of that reliance is quite different from reliance on a statement of existing fact. It is then difficult to see how the fact that the full Advice was not disclosed could give rise either to the inferences that Henry sought to draw or to an arguable defence that the decision was procured by fraud when all that was before the adjudicator was legal argument.

In any case, I do not consider that there was an arguable case that ProMep had fraudulently misrepresented counsel’s advice.

The full version of counsel’s Advice dated 13 May 2022 was, of course, far lengthier than the summary that had been provided. Mr Halkerston carefully pointed out passages that were not included in the summary.

In the first part of the Advice, counsel gave an “Overview of Conclusions” some but not all of which was included in the Overview of Conclusions in the summary. A paragraph addressing the position if it was decided that ProMep’s claims were included in the CVA was omitted as was the following:

In a section headed “Are ProMep’s Claim against Henry assets of the CVA”, the passages I have referred to above in the summary appeared, thus replicating the Advice, but in the full Advice they were followed by paragraphs that set out the contrary argument:

Counsel said that the definition of windfall assets had also to be considered and, summarising, that it appeared to provide for the Supervisor to decide whether something was a windfall asset and to give a discretion as to whether or not it should be included in the CVA. She contemplated three different conclusions the Supervisor could reach, namely:

A section headed “If ProMep’s Claims are excluded from the CVA” was also partly replicated in the summary. The summary omitted the passages that considered the “available argument” that the insolvency set-off applied.

The section headed “If ProMep’s Claims are included in the CVA” did not appear in the summary at all. Counsel noted that rules 14.24 and 14.25 were applied by paragraph 31 of the standard terms, commenting that “It would have been possible to limit the effect of insolvency set-off in the Proposals by express words but there are not such words.” Counsel said again that it would be for the Supervisor to make a determination on admission of Henry’s counterclaims for proof. She concluded this section:

Counsel then considered “possible solutions” the starting point for which was that the Supervisor would first have to determine whether the Promep Claims were or were not CVA assets.

Mr Halkerston submitted that the Surrejoinder was misleading – and misleading as a matter of fact as to what counsel had advised - because it represented to the adjudicator that counsel had positively advised both that ProMep’s claims were excluded from the CVA and that insolvency set-off did not apply. In fact, it was submitted, she had given no definitive opinion, had said that the Supervisor should be asked to determine whether the claims were excluded, and had considered the position on insolvency set-off both if the claims were excluded and if they were included. ProMep had presented its submission and summary as its understanding of counsel’s view on the legal position but, not least because she had expressed no concluded opinion, ProMep could not reasonably have believed that counsel’s opinion was as it was presented to the adjudicator.

Whatever was said in the Surrejoinder as a matter of submission, the summary clearly contemplated that the ProMep claims might or might not be within the CVA and stated more than once that it was for the Supervisor to determine whether the ProMep claims were or were not included in the CVA. That point was made again in the section headed “Are Promep’s Claims against Henry assets of the CVA?”. Therefore, whatever ProMep said its understanding of Counsel’s advice was, what she had, in fact, said was before the adjudicator.

It is right that the summary then only reproduced the paragraphs that supported the view that the claims were not assets of the CVA and omitted the paragraphs that called that interpretation into question. To that extent, it presented a partial view of counsel’s Advice but it did so in circumstances where the possibility of a different answer had been set out and clause 5.44 was expressly referred to.

The balance of the summary was all expressed on a conditional basis – that is, addressing the position if the claims were excluded and/or the Supervisor so determined. The summary omitted the paragraph setting out the contrary available argument but counsel did not express any opinion preferring that view. Similarly by omitting the section “If Promep’s Claims are included in the CVA”, the summary did not demonstrate that counsel had addressed this scenario further but again she had not preferred this view and she had concluded with a difficulty that it presented.

The summary itself made clear that Counsel contemplated differing views as to whether the ProMep claims were included in or excluded from the CVA. Her approach was to set out one view and then the contrary arguments or difficulties with that view. ProMep’s expressed understanding was that her view was that the ProMep claims were not included, even though she set out the contrary arguments and said the matter needed to be determined by the Supervisor. It goes too far to seek to infer from the omission of those qualifications that ProMep’s statement of its understanding was fraudulent. That is particularly so when this is not a matter of factual evidence but rather of Counsel’s advice being deployed to make a submission of law in the manner that I have described above.

Yet further, it has been well established, since the decision of Akenhead J in SG South Ltd. v Kingshead Cirencester LLP [2009] EWHC 2645 (TCC) (as cited, for example, in PBS Energo v Bester Generacion [2020] EWCA Civ 404) that the there is a distinction to be made between fraudulent behaviour, acts or omissions “which were or could have been raised as a defence in the adjudication” and those which could not reasonably have been raised but emerge afterwards:

In the present case, the scope of what was being presented to the adjudicator – a summary of advice which counsel had not herself approved – was clear and Henry could have, but did not, raise an issue as to whether the summary was misleading in the adjudication. Henry did not, of course, have the complete Advice but, in submissions on the enforcement proceedings, Henry went so far as to say that if counsel had advised that insolvency set-off did not apply that advice was “extraordinary and it [was] almost unthinkable that specialist counsel would have provided advice in those terms”. That was a position that Henry could have taken in the adjudication inferring that ProMep must have misrepresented counsel’s advice. The position seems to me to fall within Akenhead J’s former category and, even if there were any fraud argument to be advanced, it was, in effect, adjudicated upon.