Walker Crips Stockbrokers Ltd v Detailplain Ltd & Ors

A creditor claiming a liquidated debt is entitled to payment of the sum due. Issues of causation and mitigation of loss do not arise merely because the creditor might have protected itself by taking further security. Contractual arrangements permitting non-standard settlement do not necessarily create a right to indefinite credit or repeated rollover transactions. A customer may ratify an unauthorised transaction by subsequent conduct, including affirming the transaction and entering into arrangements dealing with the resulting liability. A claim based on an implied duty to exercise reasonable skill and care requires a legally established duty; no general duty existed here to prevent customers incurring excessive liabilities or to advise on the legitimacy of financing practices.

Walker Crips Stockbrokers Ltd claimed payment from Detailplain Ltd and Paul Cramman for unpaid purchases of highly speculative United States shares made through the claimant. It also claimed against Cramman and Adrian Miles under a guarantee given in respect of Detailplain’s liabilities. Detailplain and Cramman brought Part 20 claims against Walker Crips and Robert Savill, alleging unauthorised trading, breach of contract, breach of fiduciary duty, misrepresentation and failure to exercise reasonable skill and care.

The central issues included the effect of a rollover transaction concerning Detailplain’s shares, whether that transaction had been ratified, whether a subsequent July agreement altered the underlying liabilities, and whether the defendants had any defence or cross-claim arising from the claimant’s conduct.

1. Debt claims. Judgment was entered for Walker Crips for the unpaid account balances. The claims were for liquidated debts, not damages. Accordingly, arguments concerning causation, mitigation and the adequacy of security did not affect liability. The fact that the claimant might have obtained sufficient security to satisfy the debts did not mean that the defendants had paid, or were relieved from paying, the sums due.
2. Rollover transaction. Even if the 9 June 2005 transaction had initially been unauthorised, Detailplain subsequently ratified it. The relevant conduct included correspondence affirming the arrangements and entry into the July agreement. The transaction therefore remained effective and Detailplain continued to owe the resulting sum.
3. July agreement. Properly construed, the July agreement regulated the circumstances in which Walker Crips would refrain from exercising rights under the existing customer agreements. It did not impose a new liability in addition to the underlying debts. Its conditions had not been met. The alleged refusal to sell Stonebridge shares might have been a breach of the Detailplain agreement, but it could not arguably frustrate the July agreement and was immaterial to the result.
4. Other defences and claims. The evidence did not establish any contractual right to indefinite use of rollover or bed-and-breakfast transactions. The asserted advisory duty concerning market practices and credit financing had no legal substance. The pleaded reliance on section 13 of the Supply of Goods and Services Act 1982 did not establish a wider duty to prevent excessive liabilities or supervise the agent in the manner alleged. The alleged disclosure to Wood Gundy was not a breach of fiduciary duty and did not cause the later collapse in the share price. The public-policy argument based on London Stock Exchange Rule 3050 failed because the shares were traded on an unregulated United States market and no relevant issue of English public policy arose.
5. Judgment was entered against Detailplain and Miles for US $4,044,653, and against Cramman for US $4,838,052.13, in each case with interest to be determined. The Part 20 claims against Walker Crips and Savill were dismissed.