375+ # 0384

There was a hearing this morning in front of Justice Flaux to consider a technical legal point between Bonhams and Zanotti that the Judge described as being “a classic Chancery case of how may angels can you get to dance on a pin head that amounted to absolutely nothing”.

In summary. Bonhams are currently seeking to recover the first installment of £1m and avoid paying the second installment of £1m to Zanotti on the basis of “fraudulent misrepresentation and economic duress” (the settlement agreement proceedings). Zanotti has avoided taking part in the expensive stakeholder proceedings (with the OC and BC) on the basis he has stated he has no claim on the car. However, Zanotti is attempting to preserve his negotiating position by saying he has only “elected” not to claim but this did not stop him doing so in the settlement agreement proceedings.

In order to convey the car to Wexner, Bonhams want a clear title and a judgment on this between Swaters and the OC will be published on Tuesday. At todays hearing, in order to tidy everything up, Bonhams were seeking an order for summary judgment that Zanotti has no claim on the title.

After an hour of legal argument, Justice Flaux concluded that given the questions on jurisdiction raised by Ford/Lawson there needed to be a clear judgment on the preliminary issues and that would incorporate an order that Zanotti had no claim but the judgment had no impact on the subsequent trail between Bonhams/Zanotti in 2016. He instructed both Council to go away and come up with a draft order for Tuesday that included definitive wording and excluding words like “election”.

Because of my regular appearance at these hearings, I am now known to a number of the legal advisors and they provide an interesting insight and anecdotes on this case. Tuesday is an important day as written judgment on the title will issued (and available to the public) and there will be a hearing for legal submissions and costs. On the assumption that the title goes against them, Ford/Lawson will be faced with a big decision.

Do they continue to contest the HoA which is the only agreement that gives them a right to share in the proceeds ?

or

Do they concede and accept the HoA with the consequence that costs are awarded against them ?

My guess is the Joe will do neither and shout foul, fraud and conspiracy and launch yet another “game changing plan” using someone elses money to keep something going in Ohio aimed at stopping Bonhams giving the car to Wexner. On the other site, Max Vito has some interesting suggestions on who/what may be involved next

 

ROLLS BUILDING, COURT 8
Before MR JUSTICE FLAUX
Tuesday 10 November 2015, 02:00 PM

Consequentials/Further Arguments CL-2014-000358 Bonhams 1793 Limited v. Ms Florence Swaters and others.

 

Summary:

Accordingly, for all the reasons set out in this judgment, the answer to the preliminary issue is as follows. As at 27 June 2014, before the auction of the Ferrari model 375 Plus Grand Prix Roadster, serial no. 0384AM (the “Car”), Ms Swaters had title to the Car including, for the avoidance of doubt, the spare parts.

For the full transcript go to

https://www.judiciary.gov.uk/judgments/bonhams-v-lawson-and-others/

 

Poor Justice Flaux, another man out of his depth and blinded with bias. Unfortunately for Joe Ford and Kristi Lawson, he's the one who decides all disputed issues of fact. A trial court's finding on a disputed issue of fact can be overturned on appeal only with a showing that no supporting evidence was submitted by its proponent. The existence of alternative evidence, and alternative constructions of the existing evidence, do not permit the appellate court to reverse the trial court's findings.

If sanity prevails this would be the end of it. But as we have seen, sanity is in short supply. It is apparent that Joe Ford intends now to return to Ohio and to do all he can to frustrate Les Wexner's ability to import #0384. To what end, is not apparent. Like Justice Flaux I am also too much out of my depth and blinded with bias to understand how the change in position on the part of the OC, from undisputed owner of 50% of the net proceeds of sale in June 2014, to the owner today of nothing but several dozen banker boxes of court papers, counts as progress.

 

Kim -- thanks for posting the UK judgment. Interesting read. I'm sure this isn't the last to be heard of the OC's battle to continue onward.

 

I was in court this afternoon. Proceedings actually started at 1.30 with some legal discussions on the Zanotti case. It was hard to follow but a far as I could make out the ruling was that Zanotti had no ownership interest in the car. Discussion on costs

Time 25 minutes. Judge retired while telephone contact was made with Joe Ford.

After judgement was handed down there was discussion on costs. Joe Ford was talking on the phone from the USA relayed by loudspeakers in the court. He was having difficult in hearing some of what the counsels for Swaters and Bonhams were saying but Judge Flaux was very good at making sure he understood the counsels' points (although yet again he had to work hard to keep Joe to the point).

Provisional costs are in excess of £400K for Swaters and £133K for Bonhams. Joe argued that Bonhams had taken little part in the 2 day hearing but Bonhams claimed that the had had to do a lot of preparatory work which on the day was not needed. Judge Flaux agreed. He awarded costs to both Swaters and Bonhams on an indemnity basis rather than standard basis (I had to check this when I got home:

"The court may assess costs on one of two bases: on the indemnity basis or on the standard basis. If costs are assessed on the indemnity basis, the court will give the benefit of any doubt as to whether the costs were reasonably incurred or whether the costs were reasonable in amount in favour of the receiving party. If costs are assessed on the standard basis, the court will give the benefit of any doubt as to whether the costs were reasonably incurred or were reasonable in amount in favour of the paying party. In practice, it is rare for costs to be assessed on the indemnity basis and they will only be awarded by the court if, as we shall see from Noorani v Calver, there are specific factors which justify them – in this case hinging around Civil Procedure Rule 44.3"

Judge Flaux said he did so because of the unreasonable stance and actions outside what is a normal court basis (can't remember the exact wording - my shorthand is no good) rudeness to the court, outlandish arguments and serious and outrageous allegations right up to yesterday.

Interim Costs were awarded to Swaters of £350K on account and to Bonhams of £33K on account, both payable in 14 days.

Before costs were awarded Ford had told the court he couldn't pay to which Judge Flaux responded that was another matter for another day and was irrelevant to his decision regarding awarding costs.

We then moved on to the right of appeal. Judge Flaux stated that his judgement was based solely on matters of fact and that an appeal would therefore fail and so he would not grant the right of appeal. He did however tell Ford that he still had the right to appeal to the Appeal Court, for the right to appeal. As a layman I understood that this is not a matter of appealing Judge Flaux's ruling, but just an appeal against his decision not to allow an appeal. He advised Ford that the Appeal Court would look at the factual evidence in his judgement, exactly as he had and in his view would turn down such an appeal. He advised Ford to seek advice from Ian Ross on how the procedure works. This confused me as Ian Ross is a solicitor acting for Swaters but talking to Ross later he told me that because Ford is representing himself the court rules are that they should receive extra guidance on procedure from both the judge and the other legal teams involved.

Other points:
Judge Flaux acknowledged that he had made some minor changes to points of fact in his provisional judgement based on submissions by Ford for which he was grateful.

There was a small change to the wording of the injunction against further action in the US courts due to judgement handed down, but it remains that any further action in a US court will remain a contempt of the London court.

An extension of the deadline of witness statements for the main April trial from 30th Nov to 29th Jan.

Any amendments for pleading for the Case Management Conference of 4th December to submitted in draft form 7 days before that.

Finished at about 3.30

 

That makes for good reading (Top to bottom!).....

Interesting, that Old Guy is in the middle of it, back when Mr. Swaters was alive.....

Throw that gas tank, and the extra wheels, in the trunk.

 

A shame that there was not a better effort, IMO, to really find the "missing" $400K.
The canceled check back to Belgium, as Justice Flaux rightfully noted indicated SOMEONE cashed it...

But 1999 is not so terribly long ago, and it seems something of that size clearing Kleve's account would have the appearance of a boa constrictor eating a porcupine.

It seems the Judge was wanting Ms Kleve and her Dad's bank records, and it would have made interesting reading.

Still at the end of the day, if it was stolen by Kleve's rep, that's not the Swater's problem.

 

Indeed.

I'm half way through reading Judge Flaux's judgement - I was given a paper copy in court. Although it is 30 or 40 double sided pages it is a lot more concise, well argued and informative than the 3,500 odd posts in this thread

And he produced that in a few weeks!

 

Unless Gardner has some written side agreement with Florence Swaters, does that mean Gardner is also effectively out of the picture insofar as being entitled to any portion of the sales proceeds?

 

After reading the document I have a great respect for Justice Flaux: he expresses himself so clearly and he goes deep into every argument to conclusively debunk them.

 

I got thru it all, in about three hours......there's very little in there to quibble about, IF you recognize the arms length determination of the Belgian "purchase in good faith".
Old Guy realized in the first two pages of this thread, that this manuever would be the loophole they drove away through.

Karl Kleve, at the end of his days, just did not have the resources or the strategy to effectively recover the car.

At that point it wou have taken a James Bond like effort, to snatch it, and fly it back, and sink it into the mud....

It was gone, and when he died, it was gone from his estate.
That's how life works.

The OC looked pretty ineffective in front of the London court, and they cut them to ribbons.

 

It would make an interesting Time Line, to plot the "Estimated worth" of the stolen chassis, against the relevant developments:

Stolen from the mud = $$$
Thieves convicted but owner acquited in GA = Stan Nowak says "$500K."
Judge Flaux obviously did not recognize this expert, who is dead now anyway...

Car bought in Belgium for $100K (against the Stan Nowak valuation, Judge Flaux did not see this point)
Engine bought for $610K
xxx dolars spent = $xxxxx

Settlement for the real Title and the parts = $625K
Karl Kleve's dying breath = $2.5M to $3M

This would show the disjointed approach to the actual negotiations, and the fact that Kleve's agent had gone rouge, IMO.
That was the last person to "see the money"....

And still, Swaters got screwed on the spare parts!!
(That's also a good indication in my mind that the money never reached Ohio, or they would have gone over and just picked it all up!)
At least he was driving it, before he died....

 

No. Swaters, Gardner, and Bonhams have always stood behind the HOA. With respect to Swaters and Gardner, this means that each of them has released his or her substantive claim to ownership, in exchange for a 50/50 split of the proceeds of sale. Only Ford and Lawson have ever challenged the HOA.

According to a back of the envelope calculation on The Other Site, if Ford and Lawson were now to concede their challenge to the HOA, the costs they would have to pay, in combination with the Florida arbitration award against Ford, would eat up their share of the OC's 50%. On the other hand, it is apparent that Ford and Lawson are unlikely to prevail in the trial of their challenge to the HOA. A trial on their challenge to the HOA, resulting in a judgment to uphold the HOA, will expose Ford and Lawson to an even greater award of costs, than they would face if they were to concede today. Their only hope is a negotiated settlement with all the London parties. But this would require them to release and forego any further nonsense in the Ohio courts.

IMHO Ford and Lawson now have three choices: (a) a concession of their challenge to the HOA, leading to the wipeout of their share; (b) a trial of their challenge to the HOA, leading to the wipeout of their share, but retaining the right to engage in further nonsense in Ohio; and (c) a settlement which would forestall any further nonsense in Ohio, and which might leave a few dollars in their column. Given that choice (b) is the least reasonable, most underhanded approach of the three, IMHO this is the most likely choice of Lawson and Ford.

 

That's good......

I think Joe's MGB on blocks is now in real danger of being picked up!!!

They auctioned an MGB at COTA last weekend, but IIRC it was running.

 

Bill, I know you are not a UK lawyer, but some things must be common.

I tried to ask Swaters' solicitor how Ford/Lawson's inability to pay costs so far would impact future hearings. He of course rightfully wouldn't comment. In fact he amicably told me I was asking too many questions

Can you comment on that?

 

One thing definitely not common to the UK and USA courts is the award of attorney fees and costs. In the US each party bears its own attorney fees. By contrast, it appears from this case that attorney fee claims in the UK are huge and that the court considers itself without discretion to pare them back to any meaningful extent.

My guess of an answer to your question is that the inability to pay attorney fees does not disable a party from litigating its claims on the merits. Otherwise your justice system would be a haves/have nots system, where anyone without hundreds of thousands of pounds in liquid assets would be denied access to the courts. If the impecunious party prevails at trial then the pre-trial fee awards will reduce the losing party's judgment debt. If the impecunious party loses at trial, then all fees awarded through the end of trial will be added to its judgment. It is often the case that a party has insufficient resources to pay a judgment, and in the US the losing party can declare bankruptcy and use that process to try to protect whatever assets it does own. However, in the absence of a bankruptcy the judgment creditor can execute on any property belonging to the loser. I have mentioned this before, that Kristi Lawson's investment real estate -- if she continues to have any -- is likely to be liquidated thanks to her and Joe Ford's litigation conduct.

 

As far as I understood it from today's hearing, each party knows what it is potentially liable for from the pre hearing CMC ( Case Management Conference) where the judge agrees a budget. So Ford/Lawson should have known what they were letting themselves in for if they lost.

Next up is the HOA case. What I don't understand is who pays for it all if Ford/Lawson end up with no proceeds from that. I suppose the Belgian contingent will be no worse off if the 50% that would have gone to the Ohio contingent just goes on legal fees.

Meanwhile I guess the lawyers will be charging interest!

 

Thanks for the posting and I am sorry I missed the hearing.

An excellently crafted judgement that goes into great detail and covers all of Joe Fords arguments

 

With the ownership settled and Zanotti out of the way, Bonhams can convey clear title to Wexner in accordance with the terms of the sale. Wexners claim for recission of the contract looks doubtful so it now looks like a fight over costs.

Victoria's Secret boss Les Wexner to sue Bonhams over £11m Ferrari sale | Daily Mail Online

Central to Wexners claim is that he was unaware there was a problem with the title until he happened to read Phatboy (A.K.A Ray Lawson) one and only post (1173) a week after the auction.

No doubt he will be calling Joe as a reliable and willing witness............that is, assuming Bonhams doesn't get there first.

 

+ 1
Nathan

 

Ms Swaters owned 0384 at the time of the auction last year

 

Sorry, George, but as a lawyer I have to say that it might take me 500 words just to clear my throat!

 

Plus the parts