Auction — Special bloodstock sale of high-quality foals at Newmarket — Action by vendors, breeders of bloodstock, against auctioneers and a person, one Flood, to whom a colt had been knocked down for 430,000 guineas at the sale, but who had repudiated the bid — Vendors’ claim against auctioneers was for damages for alleged breach of duty in failing to re-auction the colt the same evening after Flood’s repudiation — The colt was re-auctioned two days later and fetched 200,000 guineas — Vendors also sued Flood for 230,000 guineas, being the difference between the bid price and the resale price — Hirst J reviewed the factual evidence and the expert evidence in detail, the latter including the views of a number of persons with special knowledge and experience of bloodstock sales and of fine art sales — The judge found Flood’s evidence completely unreliable and decided that he had in fact bid 430,000 guineas for the colt — The auctioneer who conducted the sale had considered, as one of the courses open to him, putting the colt up again for sale that evening, but had rejected this option on the ground that the closing minutes of the sale, which were all that remained, would be the worst time to resell, and that it would be more in the vendors’ interests to try to make the final bidder honour his contract and also to seek out the underbidder to see what offer he would make — After referring to the decision of the House of Lords in Maynard v West Midlands Regional Health Authority on the principles governing the determination of professional negligence, the judge found that the expert evidence showed that the auctioneer’s actions and decisions were fully and completely in line with a respectable and responsible body of professional opinion in the auctioneering world generally and also specifically in the bloodstock auctioneering world — Although prima facie it is better to re-auction on the same day, this is subject to the time and conditions being such as to permit it to be done advantageously — In the auctioneer’s opinion, in this case the potential disadvantages were too great to justify the risk — Accordingly, the plaintiff vendors had failed to establish any breach of duty on the part of the auctioneers — In case of an appeal, the judge considered what damages would have been payable if he had decided otherwise, but concluded that no damages would have been payable as it had not been shown that a resale on the same evening would have realised more than 200,000 guineas — The plaintiffs were, however, entitled to judgment against Flood for the equivalent of 230,000 guineas, ie £241,500, and the auctioneers were entitled to judgment against Flood in third party proceedings for the difference between their total costs and their taxed costs
In these
proceedings the plaintiffs, Alchemy International Ltd, claimed damages against
the first defendants, Tattersalls Ltd, for alleged breach of contractual duty
and claimed against the second defendant, James Flood, to whom the colt in
question had been knocked down at the auction on September 27 1983, the
difference between the price of 430,000 guineas which he was alleged to have
bid and the price realised two days later of 200,000 guineas. In third party
proceedings Tattersalls Ltd claimed an indemnity against James Flood on the
ground that he was the successful bidder and/or was fraudulent in bidding with
no intention of paying. James Flood in turn claimed contribution from
Tattersalls Ltd.
P Sheridan QC
and C Flint (instructed by Jacobs & Kane) appeared on behalf of the
plaintiffs; M Connell QC and H Bennett (instructed by Baileys Shaw &
Gillett) represented the first defendants, Tattersalls Ltd; Peter J Martin
(instructed by David Lee & Co) represented the second defendant, James
Flood.
Giving
judgment, HIRST J said: On Tuesday, September 27 1983, the opening day of a
four-day series of sales, the first defendants, Tattersalls Ltd, held a special
select bloodstock sale at Newmarket. Lot 116 was a bay or brown yearling colt
bred in the United States of America and sired by a stallion called Riverman.
The vendors were the plaintiffs, Alchemy (International) Ltd. At about 8 pm,
after brisk bidding, the colt was knocked down, or apparently knocked down, to
the second defendant, Mr James Flood, for 430,000 guineas.
Immediately
thereafter, Tattersalls’ officials made contact with Mr Flood, who accepted
that he had made the ante-penultimate bid of 410,000 guineas but disputed that
he was the final bidder at 430,000. He was invited to sign the customary form
giving his name and address and other details, but this was not done, though
the reason why is in dispute between Tattersalls and Mr Flood. Shortly
afterwards he left the auction together with his companion, Mr Hugh Boyle.
There ensued
discussions between Tattersalls’ officials and the plaintiffs’ representatives
which continued into the following day. Eventually, two days later, on the
following Thursday, September 29, the colt was re-auctioned and sold for
200,000 guineas.
The plaintiffs’
claim against Tattersalls is, in a nutshell, that they were incompetent in
their conduct and handling of the sale of the colt and were therefore in breach
of their contractual duty and negligent. The thrust of this attack, it is
important to note, is not directed against anything which occurred prior to the
fall of the hammer on lot 116 and the consequent sale or apparent sale of the
colt to Mr Flood. In particular, Tattersalls are not criticised for accepting
the final bid of 430,000 guineas from Mr Flood, if indeed he made it, but
rather for what they did or did not do immediately afterwards, when they had
become aware that they had a crisis on their hands.
The essence of
the plaintiffs’ case is that in breach of their contractual duty to obtain the best
possible price for their clients, the plaintiffs, Tattersalls, negligently
failed to re-auction the colt that same evening before, so far as possible, the
same audience of bidders, since, the plaintiffs allege, this was in the
circumstances obviously the correct and most advantageous course.
All these
allegations of negligence and breach of duty are denied by Tattersalls. It is
their case that they acted reasonably and with due care at all times and that
in any event it would in all the circumstances have been foolhardy, and
disadvantageous for the plaintiffs, to put the colt up again at so late an hour
at the end of a very long day’s sale.
These issues
also raise an important question of law as to the standard by which
Tattersalls’ conduct is to be judged.
So far as the
second defendant, Mr Flood, is concerned, the plaintiffs contend that he was
the purchaser of the colt for the price of
that price and the eventual resale price. Mr Flood, as I have already
indicated, denies this on the footing that his final bid was 410,000 guineas
and that he was therefore not the purchaser.
There are also
third party proceedings between Tattersalls and Mr Flood. Tattersalls claim an
indemnity against Mr Flood on the grounds that he was the successful bidder
and/or was fraudulent in that he bid with no intention of paying for the colt
and thereafter concealed his identity. Liability is denied by Mr Flood, who has
in his turn claimed contribution from Tattersalls.
Background
I now propose
to sketch in the background facts in considerably more detail.
Tattersalls
Tattersalls
are a very well-known firm of auctioneers specialising in bloodstock auctions
and have carried on this business at Newmarket and previously at Hyde Park
Corner in London for over 200 years in all. At their present establishment at
Newmarket they have a large and specially constructed complex of buildings,
paddocks, loose boxes, etc, for the efficient conduct of their sales, including
a large covered ring where the more important sales, such as this one, take
place. It is a key aspect of their business that horses on sale are available
for inspection at their premises at Newmarket beforehand and are actually
brought into the ring at the time of the sale.
The
September 1983 sales
The Tuesday sale
involved an important innovation. The sales as a whole were to last over four
days, Tuesday to Friday, September 27 to 30 inclusive, coinciding, save on the
first day, with racing at Newmarket and were entitled the ‘Highflyer Premier
Yearling Sales’.
The innovation
was that on the Tuesday only there was a select one-day sale for which the
foals to be sold were chosen on grounds of special quality by Tattersalls
themselves, the remaining three days being more open days with a less stringent
criterion of acceptance applied by Tattersalls. The arrangement was that owners
were free to apply for entry on the select day, and these entries were
scrutinised for pedigree by Tattersalls’ Catalogue Committee. After provisional
selection by this committee a representative from Tattersalls visited the
various applicants and inspected their foals at their stud, after which, all
being well, their entry for the select day was finally confirmed.
At Newmarket
itself the foals entered for the select day were allocated a separate paddock
of the enclosure, where they were open for inspection during the two preceding
days.
The idea, of
course, was to attract to the first day in particular the most prestigious
buyers at a sale where (at least potentially) the highest quality foals would
be on offer. It was thus obviously very attractive from the owner’s point of
view that his foal should be accepted for entry on that day.
For this
particular select sale on Tuesday, September 27, a total of 126 horses were
selected and listed in the catalogue, though, of course, inevitably a few of
these were withdrawn by the time the sale took place.
The
plaintiffs’ yearling operation
The plaintiffs
are a company registered in Liechtenstein and are members of a large group of
companies, based principally in the United States, which raise bloodstock
world-wide.
In 1982 they
decided to embark upon a yearling operation. For this purpose they entered into
an agreement with Mr Henry Cecil, the very well-known racehorse trainer, to buy
foals for resale, such foals to be reared meantime at Cliff Stud, Helmsley,
Yorkshire, which is managed by Mr David Cecil, who is Mr Henry Cecil’s twin
brother. Also participating was Mr Anthony Cherry-Downes, who carries on a
bloodstock business in Newmarket. Cliff Stud is leased by a company, Cliff Stud
Ltd, of which Mr Henry Cecil, his wife and Mr Cherry-Downes are directors.
For the first
year they bought a total of six foals, four selected by Mr Henry Cecil and Mr
Cherry-Downes in the United States (including the colt in question in this
case) and two purchased in earlier auctions at Tattersalls. Tattersalls were
kept informed by Mr Cherry-Downes of the plaintiffs’ yearling operation.
In due course
the plaintiffs through their above-named representatives applied to have all
six foals entered for the select day, and five of them, including the colt in
question here, were provisionally accepted. Mr Mildmay-White of Tattersalls
visited Cliff Stud on May 26, examined the yearlings, and all five were
confirmed on June 2 and eventually put up on September 27, though one of them
(which is not relevant to the case) was subsequently returned by the buyer as
unsuitable.
The colt
himself
The colt was
born on February 26 1982, his sire being Riverman and his dam Celerity. He was
bought in Kentucky in December 1982 by the plaintiffs for $95,000.
His sire,
Riverman, is French bred and was himself the winner of a number of major races
in France. His progeny had already included a number of successful horses
including one outstanding horse, Detroit, the winner of the Prix de L’Arc de
Triomphe. His dam, Celerity, was the winner of two races in the United States
and his second dam (maternal grandmother), Calahorra, was the winner of a
number of races in France.
On grounds of
pedigree, therefore, particularly having regard to the success of Riverman’s
previous progeny, this yearling colt was a foal of potentially very high
quality, though not, as is common ground, in the very highest category.
After the sale
he was named Sulafaah and has raced successfully including a place this year in
the Italian 2000 Guineas. However, his subsequent prowess as a racehorse under
that name is completely irrelevant to the issues which I have to try, and I
shall call him hereafter either ‘the Riverman colt’ or simply ‘the colt’.
The
promotional video
For the
purpose of promoting the sales there was prepared an expensive and very well
produced video film with a comment by Mr Peter O’sullivan which was shown in
court. This consists firstly of a general portrayal of the pattern and prestige
of the sales and then proceeds to record visits to a few selected studs,
including Cliff Stud, with pictures and a description by a stud representative
of foals entered for the select day from that stud. Mr David Cecil spoke the commentary
on the Cliff Stud, and the Riverman colt was one of the foals portrayed.
The
conditions of sale
These are
printed in the catalogue which covers all four days of the sale and are, so far
as is relevant, as follows:
Conditions of
Sale.
1st (c) The Auctioneer
is the sole arbiter as to the existence or otherwise of any dispute and if any
dispute arise between two or more bidders the Lot so disputed shall immediately
be put up again and re-sold.
(d) The Auctioneer reserves the right without
giving any reasons therefor to reject any or all bids . . .
Payment by
Purchasers.
4th The
purchaser of each Lot shall
(a) give his name and address to Tattersalls if
so required.
(b) take away at his own expense every Lot
purchased by him, the day following the Sale of that Lot.
(c) pay the full amount of the purchase price to
Tattersalls before removing any Lot purchased by him, and if the purchaser
shall fail to comply with any of Conditions 4(a), (b) and (c) above the Lot may
be re-sold immediately or otherwise by public or private sale and the
deficiency (if any) attending such resale shall be made good by the defaulting
purchaser on demand by Tattersalls.
Condition 4 is
the one of paramount importance in this case. It will be noted that by its
terms if any one of the buyer’s obligations is broken, Tattersalls have the
option to resell either publicly or privately and in either case either
immediately or later. It will also be noted that they have a residual right to
recover on demand any deficiency attending such resale from the defaulting
purchaser.
It is also
important to note that these conditions place the responsibility for the
exercise of the discretions fairly and squarely on the auctioneer, so that it
is on his personal state of mind and personal conduct that the inquiry must
principally focus on many important aspects of this case.
The
catalogue
The catalogue
contains a list of all the lots for sale throughout the four days, totalling
423 in all, of which, as I have already indicated, 126 were listed for the
select day.
The lots are
listed in the alphabetical order of their dams, starting at a different letter
each day, so that it was pure chance at which stage in the day any given lot
came up. Each lot is accorded a full page with a detailed description of
pedigree such as I have already given for the Riverman colt.
This colt was
listed as lot 116 — ie within 10 from the end, after allowing for a withdrawal,
and so was nine-tenths down the list for the day.
The sale
itself
I now proceed
to outline the non-contentious aspects of the sale itself and its aftermath.
The sale ring
is a large building with an oval-shaped ring surrounded by a large number of
rows of steeply-tiered seats and including a separate bidders’ enclosure. The
auctioneers’ rostrum projects out in the centre of one of the longer sides.
The auctioneer
of lot 116 was Captain Kenneth Watt, a very experienced and highly respected
figure at Tattersalls. With him on the rostrum were several other Tattersalls
representatives, including Mr Michael Hillman, who was acting as the runner for
lot 116 with the responsibility of contacting the successful bidder immediately
after the fall of the hammer; Mr David Batten, who was acting as spotter during
lot 116, assisting Captain Watt to locate the bids; and Mr David Pym, an
experienced auctioneer, who was also there to assist if need be. Mr Michael
Watt, the chairman of Tattersalls, was seated alongside, just outside the
rostrum.
The sale began
at 2 pm. Throughout the afternoon there were several foals which reached
six-figure prices in guineas, and midway through two quite outstanding lots,
nos 62 and 75, which realised 1.120 million and 1.4 million guineas,
respectively, both successively European records until surpassed later in the
evening.
Video films
were taken of the bidding, and three of these were shown in court, including
that for lot 116, the crucial lot. There was also a sound recording of the
bidding, of which I heard the tape of lot 116.
Lot 116 had a
reserve price of 150,000 guineas fixed by the plaintiffs’ representatives.
After the horse was brought into the ring at about 7.55 pm, the bidding started
quite slowly. Some of the bidding is portrayed on the video, but towards the
very end the camera is directed away from the bidders, so that in fact at the
final stage the audio tape is somewhat more helpful than the video, though in
the earlier stages, particularly when the camera focuses on Mr Flood and Mr
Boyle and, to a lesser extent, on Mr Omar Assi, the alleged underbidder, this
video is illuminating.
The tape
starts off with a brief description given by Capt Watt of the colt as follows:
Yearling from
the Cliff Stud a Partnership property. Now here is a lovely colt. A bay or
brown by Riverman out of Celerity by Dancer’s Image, the second dam, Calahorra.
Dam won two races. Calahorra won six races in France and also placed at Ascot.
Very good to follow this colt. He’ll make a lovely three-year old. By Riverman,
you know all about him. I’m bid 100,000 for him. 100,000 now for this Riverman
colt. We have very few of them to offer you.
After 145,000
guineas had been bid the tape proceeds as follows (this being the stage where
admittedly Mr Flood, who was sitting under the window, first entered the
bidding):
150, but I
haven’t got the bid. (Other voice says 2 from the top.) Thank you sir. Yes. Under the window. 150,000
I have taken it under the window.
Pausing there,
it is common ground that that is Mr Flood’s first bid. He, as I have said, was
sitting by the window.
Throughout the
200,000 and 300,000s there were one or two other references to the bid from
‘under the window’, and then at the conclusion the tape proceeds as follows:
380.380, now.
Perhaps 400? 400,000, thank you. That’s
4 now for him. 410.410. At 410. One more?
420.430.430. Quite done now. At 430. Perhaps one more? No. 430. I sell right behind at 430. Any
more, right — Bid’s in the window. At 430,000 guineas.
And then the
hammer drops.
As is apparent
from the transcript, after 410,000 guineas the bidding proceeded very quickly
through 420,000 and then lingered some time on 430,000 before the hammer came
down.
The tone of
the voice used by Captain Watt throughout is quite distinctive between the very
few questions (identified in my quotation with a question mark) seeking a bid
at a given named figure (and there are a few others I have not read) where his
intonation is interrogative and the many more occasions when he names a figure without
any such overtone. Moreover, the video shows quite clearly that throughout the
300,000s and up to and including 410,000, where the camera turns away, Mr Flood
signified his bids before Captain Watt acknowledged them by naming the figure.
The immediately
ensuing lot, no 117, was by common consent the star attraction of the sale,
being a foal of Hello Gorgeous with an outstanding pedigree. The ring therefore
was exceptionally crowded at this stage, and a good deal of excitement was
engendered, as the video showed. Eventually after some brisk bidding the Hello
Gorgeous foal was knocked down for 1.5 million guineas, setting yet another
European record for the day. A photograph taken during the auctioning of this
lot shows that at about halfway through it was precisely 8.05 pm.
Thereafter it
is common ground that the auctioning of the remaining lots took just over 30
minutes, finishing between 8.35 and 8.40 pm. During this period eight lots were
sold, including lot 123, a filly by Blushing Groom, at about 8.25 pm and then,
finally, two rather outstanding lots, nos 125 and 126, colts by two Derby
winners, Troy and Mill Reef, respectively.
Present at the
sale and active either as or on behalf of bidders or vendors were the
following:
(1) Mr Henry Cecil and Mr David Cecil
(accompanied by their respective wives) who, when present in the ring, were
seated close to the rostrum, just below it on its right. Their interest during
lot 116 was of course as representatives of the vendors, but Mr Henry Cecil was
also active on behalf of other clients as a bidder for other lots.
(2) Two representatives of Sheikh Maktoum Al
Maktoum, namely Mr Omar Assi and Mr Michael Goodbody. The former was seated
opposite the rostrum to the left and was an unsuccessful bidder on behalf of
Sheikh Maktoum for both lots 116 and 117, though the stage at which he withdrew
from the bidding for lot 116 is one of the issues in the case. Mr Goodbody was
seated on the rostrum side but further to the left and did not actually bid.
Sheikh Maktoum himself was also present but in an adjoining sitting-room and
not in the ring. Sheikh Maktoum is one of the four sons of the ruler of Dubai,
all four of whom are now extremely prominent in the racing world in this
country both as owners and breeders.
(3) Mr Mohamed Mutawa (another very prominent
Arab racehorse owner and breeder) and his English representative, Mr William
Churchward, were present during part of the select sale but left to return to
their hotel at about 5 pm, well before lots 116 and 117.
(4) Mr Flood was, of course, present during the
auctioning of lot 116 and was seated opposite the auctioneer on a level above
Mr Omar Assi on the second tier at the top under the window, accompanied by Mr
Boyle.
Immediately
after the hammer went down on lot 116 Mr Hillman left the rostrum in search of
the successful bidder (as he believed him to be) whose name he did not then
know. Mr Hillman met Mr Flood near the foot of the bidders’ enclosure, and a
conversation took place the terms of which are in dispute.
Mr Flood and
Mr Boyle then accompanied Mr Hillman to the back of the rostrum, arriving there
(as is now common ground, though it was originally strongly in dispute)
immediately following the conclusion of the bidding for lot 117, at which
juncture Captain Watt was due to leave the rostrum and hand over to another
auctioneer, Sir Peter Nugent. This was about 8.10 pm. After a hurried conversation
with Mr Hillman on the rostrum (part of which was picked up on the public
address tape), Captain Watt went behind the rostrum and held a conversation
with Mr Flood the terms and content of which are also seriously in dispute.
Shortly afterwards Mr Flood and Mr Boyle left for London, the circumstances of
their departure being also in dispute.
Immediately
after his conversation with Mr Flood, Captain Watt had a conversation with Mr
Cecil and his companions.
At about this
stage Captain Watt also had a consultation with Mr Geoffrey Hart, Tattersalls’
legal adviser, though the timing of this conversation is in dispute between
Tattersalls and the plaintiffs.
About the same
time (and it should be remembered that we are talking in minutes) Captain Watt
made a note in the flyleaf of his catalogue as follows: ‘Buyer for A
Maxwell?’ I pause. That is a reference
to a suggestion as to who Mr Flood might have been buying for. ‘Underbidder for
Mutawa Churchwood.’ Then that is crossed
out and above it is written the word ‘No’. Then ‘Others think Maktoum Al
Maktoum. Goodbody’s man. Omar Assi. Moat House.’ Further red-ink annotations made later on the
same page are not relevant for present purposes.
During the
latter part of the sale a number of announcements were made on the public
address system on the instructions of Mr David Stoddart, a senior Tattersalls
officer responsible for administration and finance. These, so far as relevant,
are as follows. First a message broadcast at 20.28: ‘Rep[resentative] of Mr Mutawa
or underbidder Lot 116 to M[ain] S[ales] O[ffice] immediately.’ Second message
groom and Mr Churchwood [sic] to M[ain] S[ales] O[ffice] a[s] s[oon] a[s]
p[ossible].’ Third message broadcast at
20.41 and 20.45: ‘Omar Assee [sic] and Michael Goodbody to M[ain] S[ales]
O[ffice].’
Later that
evening Captain Watt spoke to Mr Churchward on the telephone asking whether
Sheikh Maktoum was interested in buying the colt at the underbid price but was
told the following morning that he was not.
The following
morning there were a number of inconclusive meetings between the plaintiffs’
representatives and various Tattersalls’ representatives. Eventually, at 6 pm
that evening, Mr Henry Cecil, Mr Cherry-Downes and a solicitor met Captain Watt
and Mr Michael Watt in the Tattersalls’ boardroom. Immediately following that
meeting Tattersalls held an informal board meeting at which it was decided to
re-auction the horse on the Thursday.
This was announced
over the public address system just before 7 pm on the Wednesday evening as
follows:
Lot 116 from
Cliff Stud will be offered at approximately 11 am tomorrow after lot 257 due to
a disputed bid.
And then on
the same evening another announcement:
Now I have an
announcement. Owing to a misunderstanding between bidders, lot 116 will be
re-offered tomorrow morning after lot 257 . . . .
Meantime,
during the Wednesday afternoon Mr Stoddart met Mr Churchward at the Newmarket
Racecourse and asked him if Mr Mutawa was the underbidder for the Riverman colt
and received a negative answer. Subsequently Mr Stoddart wrote a letter to Mr
Churchward apologising for any embarrassment caused by this inquiry and stating
that Tattersalls knew the identity of the underbidder of lot 116 when the
hammer fell and that his inquiry was purely a double check.
The colt was
in fact re-auctioned during the morning session on Thursday, September 29,
immediately after lot 257, a higher reserved price of 200,000 guineas having
been fixed by Tattersalls, and eventually the colt was knocked down for that
sum to a representative of Sheikh Hamdam, another of the sons of the ruler of
Dubai.
Hitherto I
have set out prices and bids in full, but in future I shall shorten the figures
to 100s — ie 200 represents 200,000 guineas, 430 represents 430,000 guineas and
so on.
Before
concluding this introductory survey, I should briefly mention that a certain
amount of evidence was directed to alleged admissions of liability by
Tattersalls after the re-auction on the Thursday, though these were not pleaded
and in the end not pursued by the plaintiffs. I need therefore say no more in
this context than that one of these alleged admissions was made in a
conversation between Mr Stoddart and two journalists, Mr Simon O’Loughlin, who
was a witness, representing The Times, and another representing the
Press Association. The former reported his version of the conversation in an
article in The Times the following day. There was controversy between Mr
O’Loughlin and Mr Stoddart whether any such statement was made. In evidence Mr
O’Loughlin said that he interpreted Mr Stoddart’s remark as equivalent to a
gesture by an old-fashioned English firm to keep its good name intact. While I
am satisfied that Mr O’Loughlin accurately recorded what was said to him, I am
equally satisfied that no such admission was intended by Mr Stoddart.
Finally,
almost exactly six months later, on March 27 1984, Mr Flood, whose name
meantime had been circulated by the police as being a wanted man, was arrested
at Heathrow Airport and taken to Newmarket, where he was interviewed by the
police in two separate sessions on the morning and afternoon of March 28.
Statements made or allegedly made during these interviews by Mr Flood form an
important aspect of Tattersalls’ case against Mr Flood.
The
salient issues in a little more detail
It is
convenient at this stage, before I review the evidence, to sketch in a little
more detail the most important issues, a number of which I have already touched
upon in the preceding review. There are the following prominent issues of
primary fact, which I list in chronological order rather than in their order of
importance.
(1) Did Mr Omar Assi make the penultimate bid at
420?
Tattersalls’
case is that he did, and this identification is supported by the evidence of
all the relevant Tattersalls’ witnesses, including, of course, Captain Watt
himself. The plaintiffs’ case is that he did not, and that his final bid was
400, and this is supported by the evidence of Mr Assi himself and also that of
Mr Goodbody.
Although at
one time it appeared that it was to be contended by the plaintiffs that there
was some other bidder at 420, it eventually transpired that the sole issue here
is whether Tattersalls were correct or mistaken in thinking that Mr Assi bid
420.
(2) Did Mr Flood make the final bid at 430?
Here again all
the relevant Tattersalls’ witnesses support the case that he did, but Mr Flood,
supported by Mr Boyle, says that he did not, having stopped at 410. Here again
there is no suggestion from the plaintiffs or anybody else that some other
person bid at 430.
(3) What happened immediately thereafter between
Mr Flood and the Tattersalls’ representatives, including in particular Captain
Watt and Mr Hillman?
Here there are
fundamental conflicts between the Tattersalls’ witnesses on the one hand and Mr
Flood and Mr Boyle on the other as to what was said and done and with what
motive.
(4) What was in Captain Watt’s mind and what were
his intentions during the crucial half hour or so between about 8.10 and, at
the latest, 8.40 pm?
The
plaintiffs’ case is that he almost immediately, and quite wrongly, rejected the
idea of re-auctioning that evening and concentrated on other avenues,
particularly pinning the contract on Mr Flood and searching for the underbidder
(whom the plaintiffs contend he had not even identified as Mr Assi at the
crucial stage) in order to offer to treat with him privately at, if possible,
the underbid price. Tattersalls’ case is that Captain Watt carefully and
responsibly considered all three of the above options, not excluding
re-auction, that same evening, but rejected this last course as irresponsible
and contrary to the interests of the vendor, thus rightly concentrating on the
other two options. This aspect of the case is bound up with a controversy
between the two sides as to the timing of the consultation with Mr Hart in
relation to Captain Watt’s conversations with Mr Flood and Mr Cecil. Here I
must again emphasise that we are talking in terms of only minutes.
The rival
cases
The rival
cases on breach of duty and negligence are neatly summarised in the statement
of claim and the defence in their final versions after amendments during the
trial. The plaintiffs’ case is as follows, and I am shortening it to cut out
some of the legal repetition:
(g) upon [Mr Flood] failing or refusing to give
his name and address . . . and/or disputing his bid [Tattersalls] failed to put
the colt up for auction again immediately, and further failed to take any or
any reasonable steps to identify the said purchaser [that means Mr Flood] or
any principal on whose behalf he might have been acting.
(h) alternatively [Tattersalls] asked or
permitted the said purchaser to leave the premises requesting that he would
return after ten minutes, and when he failed to return [Tattersalls] failed to
put the colt up for auction immediately;
(i) [Tattersalls] put the colt up for auction
again on the third day of the sales . . . as an additional lot notwithstanding
that they knew or ought to have known
(i) that the major international purchasers of
yearlings would not be attending the sales on that day;
(ii) that the price likely to be obtained for the
colt would be much less than that bid on the first day of the sales, and less
than its proper value.
The plaintiffs
contend that this duty was enhanced by the importance of the select session on
the first day, the unique nature of the occasion and the acceptance of bids
both from the final bidder and the underbidder when Tattersalls did not know
them and took no reasonable steps to identify them. None of these last aspects
are, however, relied upon as constituting negligence as such.
Tattersalls’
case in response is summarised as follows:
[Tattersalls]
aver that they did take all reasonable care in that:
(i) believing there was a valid bid at 430,000
guineas which was in fact 280,000 guineas more than the reserve price
stipulated by the vendors, they did not re-offer the lot for sale unless they
were satisfied that the said bid would not be met.
(ii) knowing or believing that:
(a) the session of the sale was near its end
and/or
(b) there was not sufficient time to return the
colt to the ring before the end of the session and/or
(c) many people had left the sale after the sale of
lot 117 and from then on the market was less buoyant and/or
(d) the underbidder was not present,
(e) there was a probability that the lot, if
re-offered that evening, would only attract bids at a level very significantly
below 430,000 guineas,
(f) that the underbidder had shown a very strong
interest in the colt by entering the bidding at about 300,000 guineas (if not
earlier) and thereafter had made alternate bids for the colt . . . [up to]
420,000 guineas. It was reasonable for the auctioneer, Captain Watt, to seek
out
ascertain whether he was still interested in purchasing the colt thereby
avoiding or reducing the risk set out in (e) above . . .
And then
finally, governing the whole of those words:
they did not
offer the lot for resale on that same evening.
By the very
end of the case the allegation in subpara (ii)(b), that there was not
sufficient time to return the colt to the ring, was not persisted in.
In their reply
the plaintiffs riposte that, if there was indeed insufficient time to
re-auction the colt the same evening, Tattersalls were the authors of their own
difficulties, having unreasonably delayed in their handling of Mr Flood and in
their failure to make an immediate announcement over the public address system
that the colt would or might be put back in the ring immediately, and that
interested persons should remain in the sale ring. The plaintiffs further
allege that if it was an important factor to try to secure the underbidder’s
presence at the re-auction, Tattersalls had incorrectly identified him or were
uncertain as to his identity and so should not have allowed that factor to
count.
Tattersalls’
duty
There is
little dispute between the parties as to the scope of Tattersalls’ duty in the
context of this sale, namely, in essence to exercise reasonable care to obtain
the best price for the vendors.
It is,
however, in fundamental dispute between the plaintiffs and Tattersalls by what
standard this duty is to be judged. Mr Connell, on behalf of Tattersalls,
submits that, as professional men, the standard by which Tattersalls’ duty
falls to be judged is by whether or not it accords with a standard acceptable to
a respectable body of professional opinion in the relevant profession and that
it is not for the court to decide the case on preference between the view of
two rival bodies of experts. Mr Sheridan, on the other hand, contends that this
principle is inapplicable to the present case and that the court can and must
choose which body of expert opinion it prefers.
I shall of
course develop the submissions addressed to me from both sides on this
important topic later on in this judgment.
The evidence
The evidence
falls into two main categories, namely factual evidence by or on behalf of all
three parties, and secondly expert evidence on auctioneering conduct and
practice, six experts having been called, three each by the plaintiffs and
Tattersalls, respectively. I shall consider first the factual evidence as a
whole and will then proceed as a separate exercise to consider the expert
evidence as a whole. Because of the nature of the issues it is necessary to set
out the evidence in a little more detail than usual.
Evidence of
fact called by plaintiffs
Mr Henry
Cecil
Mr Henry
Richard Cecil has been training at Newmarket for some 16 years.
He described
the select sale on the first day of the sales as the highlight of the week,
because the best horses were entered and everyone who mattered in the racing
world was there. This helped towards higher prices. He said the less good
horses were better entered on subsequent days, as otherwise they would get
smothered by the best horses. Of the five colts entered by the Cliff Stud for
that sale the Riverman colt was by far the most exciting animal. Riverman was
described by Mr Henry Cecil as ‘a hot stallion’, whose family had been badly
catalogued in the sale in the USA, a defect which Mr Cecil had rectified for
the Newmarket sale. Quite apart from his pedigree he was a very active,
well-made colt, who had developed very well during his upbringing at Helmsley
and who also attracted interest in the paddock after being taken to Tattersalls
two days before the sale. The reserve price had been fixed by Mr Cecil and his
colleagues at 150 as the minimum price, which was acceptable, though they hoped
for much more.
At the auction
itself, Mr Henry Cecil was present throughout, accompanied by his wife and Mr
Cherry-Downes, all three seated beneath and very close to the auctioneer’s
rostrum. When lot 116 came up, it was very crowded, and he could not see the
bidders, though he heard some of the bids. He first knew something was wrong
when Captain Watt came down some 10 minutes after the hammer fell on lot 116,
shortly after the conclusion of lot 117. In this first conversation, according
to Mr Henry Cecil, Captain Watt said that: ‘they had got a bit of a problem.
There has been a bit of a mistake, but not to worry, it will all be sorted out.
There was some confusion over the bidding and a gentleman said it was not his
bid, but we know who the underbidder was’, namely Mr Mutawa, who was named.
Captain Watt concluded by saying that Tattersalls would sort it out and that
the Cecils need not worry, since they would be all right and Tattersalls would
make up the difference. Mr Cecil said he was rather confused, since the animal
had been sold and so he regarded it as being Tattersalls’ problem and no longer
his. He thought Tattersalls seemed confident in what they were doing, as
otherwise (to quote Mr Cecil directly) ‘as at any other sale the animal would
be brought back immediately or would never have left the ring and would be
re-auctioned’. He said there was ample time for it to be re-auctioned and that
there was no physical difficulty, since it was not more than 500 yds from the
ring to the loose box where the colt was stabled.
A short time
later, still in the ring during the auction, there was a second conversation
with Captain Watt, in which he said that Tattersalls now thought the
underbidder was Sheikh Maktoum or his representative, Mr Omar Assi; that the
bidder had now disappeared; but that Tattersalls would sort it out by
contacting the underbidder and the Cecils should not worry. Mr Cecil said that
he then told Captain Watt that Sheikh Maktoum and his entourage were staying at
the Moat House Hotel in Newmarket.
Mr Henry Cecil
said by then he was getting concerned, as the problem involved their livelihood
in a new venture in which success seemed to have turned into chaos and
disaster. Tattersalls took no further initiative to contact him that day, but
after the sale he went to an office behind the sale ring in a separate building
and spoke to Mr Stoddart, who said in effect that matters had not proceeded any
further. It was never suggested by Tattersalls’ representatives at any stage on
the Tuesday that the horse should be put back for auction or that there should
be an announcement that this might take place.
On the
following day, Wednesday, during the racing in the afternoon, Mr Cecil got hold
of a solicitor friend, Mr Jeremy Richardson, and as a result an appointment was
made to see the directors of Tattersalls at 6 pm that evening. This duly took
place, attended on the Cecil’s side by Mr Cecil, his wife, Mr Cherry-Downes,
and Mr Richardson and on Tattersalls’ side by Captain Watt and Mr Michael Watt.
Mr Cecil described Tattersalls as opening the discussion by asking whether they
knew the bidder, which caused him and his colleagues considerable annoyance,
since it seemed to suggest that they were guilty parties. Mr Cecil said the
matter was not their responsibility. The animal had been sold and was no longer
theirs, so it was up to Tattersalls. Tattersalls suggested a resale the
following day, Thursday, to which Mr Cecil replied that it was up to them. This
he regarded as most unsatisfactory, since it was a different sale and, as he
put it, ‘stone cold’. Consequently, he said that if the colt was resold the
next day, it should not come up under Cliff Stud’s name.
Mr Cecil
expressed the view that if it had been re-auctioned on the Tuesday evening he
liked to think it would have realised upwards of 500. Even if the underbidder
had left, he thought that there could still be interest, as it was a good-looking
colt. He was present at the auction on the Thursday. He described it as a
low-key sale, a mere matinee as compared with the gala performance on the
Tuesday. The reserve, which was raised to 200, was fixed by Tattersalls and not
discussed with him.
In
cross-examination, Mr Henry Cecil was taken in detail through each of the
conversations, and, although there were some minor differences as to emphasis,
there was no real challenge as to his account. When it was suggested to him
that it was a sensible idea to approach the underbidder, Mr Cecil responded
that he thought that it was idiotic. It would be much better to bring the foal
back for re-auction, and it was not necessary to have the underbidder there.
When pressed that it was essential for the auctioneer to be sure that the
underbidder was there before re-auctioning the same evening, Mr Cecil disagreed
completely and asserted that the auctioneer should have gone straight on again
regardless, since there had been no effective sale. He agreed, however, that he
had never put forward any positive suggestions to this effect, because, he
said, it was Tattersalls who were responsible for conducting the resale. Even
if it had been the last lot, he said, he would have been happy for it to be
re-auctioned that evening, if that were the earliest it could be brought back.
In his experience, although the spectators might leave after the final big lot
(in this case no 117), the serious buyers generally stayed. In his experience,
he said, underbidders are frequently no longer
occasion in the case of Sheikh Maktoum himself, when Mr Henry Cecil himself was
acting for the Sheikh. Even if the underbidder was interested, he might well
not come across with the equivalent of his underbid.
In conclusion
on this topic, Mr Cecil agreed that it was a fair summary of his view that in
the circumstances the only sensible way of making the best of a bad job was to
re-auction the colt that same evening and that while he liked to think it would
have gone well, it was obviously in the lap of the gods.
On more
general topics, Mr Henry Cecil said that prior to a sale of this kind potential
purchasers make careful preparations, investigating foals of potential interest
with great care, compiling a short list and, for those short-listed, arranging
a veterinary inspection. Buyers did not usually buy on a whim, though that
sometimes happens.
Mr Anthony
Cherry-Downes
Mr Anthony
Cherry-Downes is a bloodstock dealer and also, of course, a director of Cliff
Stud Ltd. He was in charge of the administration and was the author of most of
the letters to Tattersalls which are in evidence dealing with the format of the
select sale and with the entry of the five foals. He described the advantages
of the select day as tremendous, having regard to the quality of both the
animals and the buyers. International-type horses are attracted, so that much
higher prices are likely to be achieved. He was present throughout the sale,
and his account of the various conversations was substantially in accord with
that of Mr Cecil, though he thought that in the first conversation not only Mr
Mutawa but also Mr Churchward were mentioned. He had made one or two additional
visits on his own on the Tuesday and the Wednesday to Tattersalls to inquire
how matters were progressing, but nothing of significance arose from these
visits.
Mr
Cherry-Downes’ attitude was that, whether or not Tattersalls were searching for
the underbidder, it was absolutely essential to have the horse in readiness for
re-auction on the Tuesday evening, since it was imperative it should be sold
that evening before the select sale was completed. In his view, the absence of
the underbuyer was not important, because it was a characteristic of Arab
buyers once beaten in the ring not to wish to come back again.
In
cross-examination Mr Cherry-Downes agreed that normally one might think an
underbidder was very important; but that all depended on his attitude. It was
preferable to have him there, but there was no guarantee that he would bid
again. If he wanted to bid again, he would come back when the re-auction was
announced over the tannoy.
When asked
about Tattersalls’ opening gambit at the meeting with the directors on the
Wednesday evening, Mr Cherry-Downes agreed that, however upsetting that seemed
at first sight, it may have been prompted by the fact that the colt had been
mistakenly entered as partnership property, to which a special condition of
sale applied. He added that there was no enmity between him and his colleagues
and Tattersalls. Mr Connell for his part made it absolutely clear that there
was no suggestion whatsoever against Mr Henry Cecil or Mr Cherry-Downes or any
of their colleagues of complicity in any rigged bidding.
Mr David
Cecil
Mr David Cecil
has been manager of the Cliff Stud for three years. He job is to rear the
foals. The Riverman colt was in his view the nicest of the foals entered by the
stud, a very good foal with an excellent temperament who had developed very well
indeed and was a good prospect for both selling and racing, because of his
pedigree, his physique, his appearance, and his ability as a good mover. The
five foals had been brought to Newmarket on Sunday, September 25, and during
the next two days the Riverman colt in particular attracted a lot of interest,
being taken out of his stable 50 to 70 times for buyers to look at. Several
appeared serious, and among them were some of the top buyers.
During the
sale Mr David Cecil was mostly with his yearlings, it being a four-minute walk
from the box to the ring. He stood in the gateway when the colt was auctioned.
He first learned of the problem about 10 minutes later, having spent the
interval accompanying the horse back to its box and congratulating the staff.
He only heard part of the discussions with Captain Watt. He said that if he had
been asked before the end of the sale to bring the colt back, there would have
been no difficulty at all, and he would have needed 10 minutes at the maximum
and considerably less if they had hurried. This last piece of evidence, though
disputed at first by Tattersalls, was eventually agreed, so that it became
common ground that there was no physical difficulty in bringing the colt back
to the ring for re-auction that same evening.
Mr Omar
Assi
Mr Omar Assi
has been one of Sheikh Maktoum’s personal secretaries for the past 10 years and
has been involved in buying on his behalf for over seven years. He attends
sales all over the world, usually about 12 per year in the United States,
England and Ireland. He had inspected the Riverman colt in the paddock before
the sale accompanied by the Sheikh, Mr Goodbody, and a large entourage, which
occasion, it so happens, was depicted in a photograph published in Horse and
Hound. After discussion, the bidding limit was fixed at 400, though he
could exercise a personal judgment to go a little higher.
He said that
in the auction ring itself he could be clearly seen and that he made his bids
clearly and in his customary manner by raising his hand or his catalogue. He
entered the bidding at about 280 or 300 and stopped at 400. Thereafter he did
not pay much attention, though he heard the hammer fall at 430. He then left
the ring and had a short word with Sheikh Maktoum in the sitting room behind
the ring, returning shortly after the bidding for lot 117 had started and then
participating himself, though he was eventually outbid on this occasion also.
When the horse was reoffered Sheikh Maktoum was not disposed to accept, since,
said Mr Assi, ‘once we lose a horse, we lose a horse’.
In
cross-examination he was questioned in detail on the transcript of the bidding
but was quite adamant that he stopped at 400 and rejected the auctioneer’s
invitation to bid at 420 by turning sideways.
Mr Michael
Goodbody
Mr Michael
Goodbody owns the Gainsborough Stud at Newbury and is retained by Sheikh
Maktoum. He and a number of colleagues of the same interest examined the
catalogue for the select sale and made a short list, of which in the end the
only effective candidate for purchase was the Riverman colt, chosen, he said,
because he had a first-class sire and was himself a very good specimen.
He attended
the sale and could clearly see Mr Omar Assi across the rostrum to his left from
his position quite close to the auctioneer on the latter’s left. Prior to the
auction he and his colleagues, including the Sheikh himself, had discussed the
price and decided that 400 should be their limit. Throughout the bidding his
attention was focused exclusively on Mr Assi as he bid. During the 300 range
there were only two bidders, of whom Mr Assi was one. Mr Goodbody saw Mr Assi
make a final bid of 400 and then thereafter shake his head. Once Mr Assi had
ceased bidding, Mr Goodbody did not pay much attention to the remaining bids
and was not aware of the price at which the colt was finally knocked down.
Later that
evening at about 8.30 he received the telephone call from Captain Watt at the
Moat House Hotel in which he was informed that there had been a mix-up over the
Riverman colt, as Tattersalls could not identify the purchaser. Captain Watt
then asked whether they would take the horse at the underbid price (which Mr
Goodbody said he interpreted as Mr Assi’s final bid of 400). Mr Goodbody
replied that he doubted it very much but would ask his principal.
Next morning
he talked to the Sheikh and they decided not to take the colt and so informed
Tattersalls. Mr Goodbody explained that he thought the whole thing was
suspicious, as they feared that they had been run up in the bidding. Mr
Goodbody was strongly challenged as to the stage at which Mr Assi stopped
bidding, but he stuck firmly to his evidence and said that he was watching Mr
Assi all the time and definitely saw him stop at 400. Over and above that limit
Mr Assi would, however, have had a residual discretion and could, if he thought
right, go by a short margin over the limit.
On more
general matters, Mr Goodbody confirmed Mr Henry Cecil’s evidence as to the
preparatory steps a potential buyer would take before embarking on a sale of
this kind. He said that the limit of 400 was a very good price for this foal
and he thought that its value was nearer 200.
Evidence of
fact called by Tattersalls
Capt
Kenneth Watt
Capt Kenneth
Watt has been with Tattersalls for the best part of 30
then senior partner, and finally chairman after they became a limited company,
an office which he held until 1982.
He said that
he understood a dispute to arise when two or more bidders claim in the ring
that the last bid was theirs. When this occurs, perhaps six to seven times a
year, he would put the horse up again immediately for re-auction. However, the
present case was quite different in his view, because there was no dispute in
the ring and its particular circumstances were unprecedented, indeed unique in
his experience. In accordance with his usual practice he had inspected the
Riverman colt beforehand and thought it a fine colt, a bit plain in the head
and slightly dipped but a very valuable horse, though not in the very highest
category. Valuation for this class of foal depended on the number of bidders in
a certain stratum of wealth. Bearing in mind that the colt had been sold for
about £62,000 in the United States, his aspiration was for about 150-200 at the
auction.
The actual
bidding during lot 116 was a very simple and straightforward matter, save that
he did not recognise the successful bidder, as often occurred. There was no
alternative but to take a bid in such circumstances, unless, for example, the
bidder was a known member of some blacklist. At one point, about 300, the
bidding resolved itself into two bidders, both opposite him half left, one high
up under the window, who was the final bidder, accompanied by a colleague.
There was not the slightest doubt in Captain Watt’s mind that this bidder, whom
he now knew to be Mr Flood, was the final bidder. The other man lower down in
the same area was, without any doubt in his mind, the underbidder at 420. This
was Mr Assi, whom he clearly recognised though he did not know his name.
He then
proceeded to auction lot 117, and it was only after this was concluded that the
problem was first drawn to his attention by Mr Hillman in a brief conversation
inside the rostrum. Captain Watt therefore went behind the rostrum and saw Mr
Flood and his companion together with Mr Hillman. Mr Batten joined them shortly
afterwards. Captain Watt described this conversation by saying that he told Mr
Flood (as he now knew him) that he was mistaken and that he had clearly bid
430. Mr Flood repeatedly denied bidding beyond 410 and refused when
specifically asked to give his name and address. It was, said Captain Watt, a
strange and unusual and bizarre situation, and knowing that all human beings
make mistakes, he was anxious to double-check with his spotters as to the
identity of the final bidder. So he asked Mr Flood to come back 10 minutes
later, which Mr Flood promised to do.
At this
juncture Captain Watt was asked by Mr Connell to comment on the suggestion that
he should immediately have made preparatory arrangements for a re-auction.
Captain Watt replied that he could not agree this would have been correct,
since there was no dispute in the ring. By this he said he meant not dispute in
the normal sense of the word, but a mendacious denial of the bid by the final
bidder apparent only after the lot had been sold and had left the ring. He had
very few alternatives and very little time left. The foal could have come up
again at the end, but that would not have been a good time or fair to the
owner, since in his experience if an animal is re-auctioned immediately, there
is a serious stigma and it does not make as much again. Overall the best
interest of the vendor was not to re-sell immediately but to try to make the
purchaser honour his contract and to seek out the underbidder to see if he was
willing to purchase at the underbid price. He had, however, definitely
considered immediate re-auctioning as one possible course of action.
Immediately
after the conversation with Mr Flood, Captain Watt had his first meeting with
Mr Cecil and told him that there was a problem and that Tattersalls would try
to fix it up. He told Mr Cecil that he did not know the name of the
underbidder, but since someone had suggested it was an agent for Mr Mutawa, he
told Mr Cecil that he thought it was Mr Mutawa’s agent. He did not then know
that Mr Mutawa’s agent was Mr Churchward. He also told Mr Cecil that
Tattersalls would make up the 10,000 guineas difference.
It was after
this conversation and after the 10 minutes had elapsed that he realised that Mr
Flood was not coming back, so he sent out runners to search for him. It was
also at this juncture that he consulted Mr Hart. They discussed if there was a
dispute but agreed there was not. They also discussed conditions 4(a) and (c)
and decided that Tattersalls were entitled to offer the foal to the underbidder.
Since he thought a private sale of this kind was much more in the interest of
the vendor than a re-auction so late that evening, he finally abandoned the
latter idea after the consultation with Mr Hart. There then followed the second
conversation with Mr Cecil in which Sheikh Maktoum was mentioned, Captain Watt
having been told meantime that the underbidder was his agent. Mr Cecil then
gave Sheikh Maktoum’s address at the Moat House Hotel. Hence Captain Watt’s
last entry on the flyleaf of his catalogue.
Later in the
evening he telephoned Mr Goodbody and said words to the effect that they were
the underbidders and would they still be interested. He was not sure if any
figure was mentioned. Mr Goodbody answered that they could be interested and he
would let Captain Watt know the following morning. However, next morning they
refused to take the colt.
At the meeting
with the Cecils on the Wednesday at 6 pm the Cecils’ theme was ‘the problem is
yours and you solve it’. This was followed by a board meeting by which time 24
hours had elpased and the purchaser had not materialised, so the board decided
to reoffer the colt as advantageously as possible and to give as wide notice as
possible. They therefore chose the best position in Thursday’s sale and decided
to increase the reserve to 200, since they thought it should make at least half
the underbid. On both the Wednesday and the Thursday there were very large
attendances, and both were high-class sales.
In summary,
Captain Watt said that the vendors’ interest was at all times uppermost in his
mind in an unprecedented situation, and he would not have done any differently
today.
In
cross-examination by Mr Sheridan, Captain Watt denied the suggestion that he
had made up his mind at the outset not to re-auction. The decision not to
re-auction was not taken until after his discussion with Mr Hart. After the
conversation with Mr Flood priority no 1 was to find out the truth, and for
this purpose he needed to consult all the spotters to find out the facts. There
was always the possibility that the bidder might come back later and settle up.
However, when he did not return and could not be found, they realised something
was wrong.
Captain Watt
agreed that it was perfectly feasible to re-auction the colt that same evening,
although it was late, and that he could have made an announcement. If they were
going to re-auction that evening, the sooner that announcement was made the
better, in order to retain the audience. But such an announcement at that stage
would be disadvantageous, as it would have lifted the pressure off Mr Flood. In
any event in his view, the closing part of the sale was the worst possible
time, and a re-auction on Thursday was better, with plenty of time to give
advance notice and dispel the stigma. He took into account the possibility of
an immediate re-auction but did not approve, particularly after talking to Mr
Hart, who backed up his opinion. In the result he thought it wrong and
foolhardy to risk an immediate re-auction but right to seek a private sale for
a price as near as possible to 420. If Mr Goodbody had accepted the offer to
treat, he would have been delighted.
As time went
on he got less and less hopeful about Mr Flood turning up and more and more
attracted to the idea of offering to the underbidder. However, if he had
totally misidentified the underbidder, it would have been more attractive to
have re-auctioned straight away.
Captain Watt
firmly denied the suggestion that was made to him that he was concentrating on
finding the underbidder because he was afraid that the latter might have been
upset, and so was anxious to explain the matter away to keep the goodwill of a
big Arab buyer. As to reselling on the Thursday, he agreed that the price for a
foal of this high quality depends on who in a small stratum of wealthy people
was interested. He did not know if such people would be there in person on the
Thursday, though their agents would probably be present.
Captain Watt
agreed that in deciding whether to approach the underbidder something would
turn on his personality. Until he or his principal were fully identified they
could not be sure that he had the appropriate business standing. Captain Watt
also agreed that, although the underbidder might be prepared to offer his
original bid, he might well seek to bargain it down, and the more likely he
thought the successful bidder was bogus, the less likely he would be to offer a
good price and the easier for him, in Captain Watt’s own words, to do ‘a bit of
horse coping’.
When
cross-examined by Mr Martin, it was put to Captain Watt that his repeated
announcement of the figure 430 at the conclusion of the bidding was
interrogatory rather than in acknowledgement of a bid which he had received and
that he was mistaken in thinking that Mr Flood had ever bid 430. But Captain
Watt firmly denied these suggestions and said that at the very end, just before
the hammer came down, he looked back at Mr Flood under the window, and
pointed directly at him. It was also put to him forcibly that the sole
conversation with Mr Flood took place in the short interval between lots 116
and 117 rather than after lot 117, and that it was a snatched and perfunctory
conversation which never got down to brass tacks, and which left in Mr Flood’s
mind the impression that his denial was accepted and that Tattersalls were now
looking for the underbidder. The latter suggestion was firmly denied by Captain
Watt and the former subsequently abandoned.
Mr
Hillman, Mr Batten and Mr Pym
Also on the
rostrum with Captain Watt were Mr Michael Hillman, acting as a runner, and Mr
David Batten, acting as a spotter (both these being members of Tattersalls’
staff), together with Mr David Pym, a freelance auctioneer of 10 years’
standing who was retained for the occasion by Tattersalls and was at this
moment observing and ready to act as a reserve spotter. All three confirmed in
evidence that they had no doubt that the successful bidder was the man they now
know as Mr Flood and that the underbidder was Mr Omar Assi. Mr Hillman
recognised Mr Assi but did not know him by name and thought he was the
representative of Mr Mutawa as I shall describe shortly. Mr Pym and Mr Batten
on the other hand did know Mr Assi by name.
Mr Hillman’s
evidence was that immediately after the hammer fell on lot 116, in accordance
with his duty as a runner, he set off with a pad of confirmatory sales forms to
find the successful bidder. He met this gentleman near the foot of the steps to
the bidders’ stand and invited him to complete the form, but he declined and
said he had only bid 410 not 430. He then asked him to come back to the
rostrum, and Mr Flood (as Mr Hillman now knows him to be) asked to bring his
friend, who was still seated near the top of the tiers. The three of them
proceeded towards the rostrum, whereupon Mr Flood and his friend said they
wished to watch the bidding for lot 117, which they did up to or virtually up
to its completion. They then accompanied Mr Hillman to the rostrum, where Mr
Hillman got word to Captain Watt that he had a problem. Captain Watt thereupon
came out to the back, and Mr Hillman said that the gentleman denied bidding 430
and had not given his name and address. Captain Watt thereupon asked Mr Flood
for his name and address but Mr Flood refused to give them and disputed that he
had bid more than 410. Captain Watt then called upon Mr Batten to verify Mr
Flood as the successful bidder, which he did. Mr Hillman then said that he knew
the underbidder and probably mentioned Mr Mutawa’s name. He immediately set off
in search of Mr Mutawa or his representative but could not find them and
reported accordingly to Captain Watt.
Mr Batten said
that at Captain Watt’s request he confirmed Mr Flood as the final bidder and
then returned to the rostrum, where he stayed until after lot 118 or 119. On
leaving the rostrum, he met a Tattersalls colleague who said that the
underbidder was Mr Mutawa. Mr Batten contradicted this and said it was Mr Assi
on behalf of Sheikh Maktoum and set off to find him. He spoke to one of Sheikh Maktoum’s
trainers, Mr Steward, who informed him that Mr Assi had returned to the Moat
House Hotel. Mr Stoddart was so informed. Mr Batten said he knew Mr Assi well,
having met him at previous sales and visited Sheikh Maktoum’s stud. In his
experience the record of the big Arab owners in general and Mr Assi in
particular was impeccable, both in their buying and their racing activities.
So far as the
spotter’s job is concerned, Mr Batten said that if there are two bids running
well, the job of the spotter is to look out for other potential bidders and
note their presence, though they will not get in until one of the other two
drops out. Thus, in this case, a bidder with a limit of, say, 380 would not
have got in at all during the 300s. However, so far as he remembered, no others
were taking any interest during the 300-400 range.
Mr Pym was not
involved in the discussions afterwards, apart from being asked by Captain Watt
to confirm that the man at the window was the successful bidder. He was never
asked anything about the underbidder. If he had been in Captain Watt’s shoes
with Captain Watt’s knowledge during the remaining stages of the sale on
Tuesday, he would have done the same, since the benefits of re-auctioning are
doubtful and he would have expected an immediate re-auction in such
circumstances to make a great deal less.
Mr Michael
Watt
Mr Michael
Watt joined Tattersalls in 1954, began auctioning in 1957 and has been chairman
since 1982. During the sale of lot 116 he was sitting to the right of the
rostrum and had a very good view. From about 250 onwards there were only two
bidders, namely Mr Flood (as he now knows him) on the second rail below the
window and Mr Assi further down and somewhat to Mr Flood’s right. He knew Mr
Assi by sight but not by name as one of Sheikh Maktoum’s representatives, from
the time that the latter entered Tattersalls’ orbit about two years previously.
Without doubt, so far as he was concerned, Mr Assi bid 420 and Mr Flood 430,
after which Mr Assi turned away. Mr Watt left immediately after lot 117 was
sold and returned to his lodge adjoining Tattersalls’ premises, where he was
entertaining a number of buyers to dinner. Later that evening he got an
unparticularised message from his secretary that there had been a hitch in the
bidding for lot 116.
He attended
the meeting in the board room at 6 pm the following day, where the Cecils’
attitude was that it was Tattersalls’ problem. He presided at the informal
board meeting where it was decided to re-auction the horse the next day with an
immediate announcement and also to increase the reserve because of the good
underbid. Although it was a high-class foal, it was not perfect, had inherited
some of the faults of its sire, and was probably worth about 150-200.
Mr Watt
himself re-auctioned the colt on the Thursday. He said it was nonsense to say
that there were no international buyers on the Thursday, since although the
Arabs may have gone, they would leave their agents behind with power to act. If
the colt had been re-auctioned at the end on the Tuesday, it would, in Mr
Watt’s opinion, have been disastrous, the worst of all possible worlds, since
the correct course was carefully to set the stage for a resale as
advantageously as possible.
In
cross-examination he said that if the horse were of suitable quality for the
select sale, he would not advise a vendor to take it out if it was originally
listed at the very end of the day. The select day was the best day, but the
others were nearly as good.
When asked
about the form of the announcement of the re-auction, he agreed that in fact
there had been no misunderstanding between the bidders and he was not sure why
the message was disseminated in this way. It may have been a bland form of
words to dampen down the public’s anxiety.
All the
Tattersalls’ witnesses who were on or near the rostrum said that, after the
excitement of lot 117, there was a very substantial exodus from the arena,
including a large number of spectators but also, they felt sure, some buyers.
Mr
Geoffrey Hart
Mr Geoffrey
Hart is a solicitor of the Supreme Court who has been employed as a legal
adviser by Tattersalls for 15 years, though in 1983 he also acted as an
independent consultant.
He first heard
there was trouble about a bid (not then identified) shortly after the completion
of lot 117, and he went round to the rostrum, where he had a word with Captain
Watt, who said he was sorting the matter out himself. Mr Hart therefore
returned to his office, but a few minutes afterwards, hearing that there was a
difficulty in finding the purchaser of lot 116, he set off back to the rostrum
and was soon met by a messenger saying that Captain Watt wanted him
immediately. When he got to the rostrum he and Captain Watt held a conversation
at the back, inside the ring, while Sir Peter Nugent was auctioning foals from
the front of the rostrum. Their conversation lasted from six to seven minutes,
and, trying long afterwards to fix the time, he recollected that,
contemporaneously with the end of his conversation with Captain Watt, Sir Peter
was selling a foal with a striking name, which he believed to be Blushing Groom
(ie lot 123). This, if correct, would fix the conversation at about 8.25 pm.
His
conversation with Captain Watt fell into three stages. In the first Captain
Watt described the positions in the arena of the bidder and the underbidder,
the bidder’s denial of his final bid, and his failure to come back after the
appointed 10 minutes. Captain Watt then asked if he was right in thinking that
the bidder’s claim for a dispute was incorrect. Mr Hart said that he could not
decide on the question of a dispute, as he was not on the rostrum, but it was
perfectly open to the auctioneer to rule in appropriate cases that there was no
dispute. Having checked with Messrs Batten and Pym, Mr Hart then told Captain
Watt that he thought he was probably dead right and that this was in fact a
case of a bidder reneging on his contract.
During the
second stage, Captain Watt asked whether there was a contract, seeing that the
bidder had not signed the slip, to which Mr Hart replied that the contract is
the hammer. At this stage Captain
man has not given his name and his address, so what is the position?’. Mr Hart
replied that this was an ‘or’ situation, ie that condition 4(c) applied in case
of a breach of any one of the buyers’ various obligations thereunder.
Captain Watt
then read out the words, ‘. . . may be resold immediately or otherwise by
public or private sale’ from condition 4(c) and asked whether the word
‘otherwise’ referred only to public sales, to which Mr Hart replied that it
applied to both public and private sales.
In the third
stage Mr Hart asked Captain Watt for a detailed description of the two men,
which Captain Watt gave him.
Immediately
afterwards Mr Hart went round to the Accounts Department, gave the description
of the two men to various of the staff and instructed them to carry out a
search. However, no clues were found that evening. His thoughts were that it was
far more likely than not that they would never see the bidder again.
At no stage
during the Tuesday evening was he asked for specific advice on the question of
re-auctioning that evening, but he felt sure that it must have been in Captain
Watt’s mind, since Captain Watt seemed to be considering all the various
options.
When
cross-examined about his conversation with Captain Watt, he denied the
suggestion that he interpreted the latter’s attitude as being mainly interested
in selling by private treaty to an underbidder, but said on the contrary that
Captain Watt was concerned about immediate re-auction. However, they did not at
any time focus on the final words of condition 4(c), and though he now agreed
that Tattersalls’ ultimate rights against a defaulting bidder might well have
been an important factor in the equation, he did not see it as such at the
time.
Detective
Chief Inspector Chapman
Detective
Chief Inspector Stuart Chapman is a member of the Suffolk Constabulary
stationed at Bury St Edmunds. The chief inspector, accompanied by Detective
Constable Moye, held two interviews with Mr Flood at Newmarket Police Station
on March 28, one in the morning and the other in the afternoon, the latter
attended by Mr Flood’s solicitor, Mr Paul Harrington. During the second
interview Mr Flood also made a signed written statement in his own handwriting.
The salient
features of these interviews as recorded in contemporaneous notes by the
detective chief inspector may be summarised as follows. Mr Flood said he was
interested in two horses, one prior to lot 116, and having failed to secure
that he bid for lot 116. He said he was a genuine bidder. When asked what
checks he had done on the horse and how he could afford to pay for it, he said
as follows at the first interview:
Q So you are saying you were a
genuine bidder?
A Yes.
Q What checks had you done on
the horse, ie veterinary examination, etc?
A None, I just heard it was
one of the three horses worth buying in the sales.
Q Who did you hear that from?
A I was talking to Mick
O’Toole at lunchtime and he mentioned it.
Q Surely if you had intended
to spend that sort of money out, you would have had the horse examined by a
vet?
A No.
Q Have you got the money to
buy such a horse?
A I haven’t got it personally
but I could put that sort of money together by getting someone to come in with
me.
Q So you can tell us who?
A Boyle would have had a quarter share and
probably someone like Noel Furlong and Barney Curley from Ireland.
Q So you expect us to believe
that you were prepared to buy a horse for 400,000 guineas with no inspection of
the horse, no examintion by a vet, no committed financial backing and just on
the chit chat at the sales?
A It wasn’t chit chat. It was
Mick O’Toole who knows what he is talking about.
Q Nevertheless, you had no
financial backing?
A A colt as a yearling is
bought at its cheapest price. It will always fetch more later on, so it’s a
winner.
Q I can’t believe that.
A Well, 97 per cent are.
Q How long would it have taken
to raise the money?
A I could raise the money in
20 minutes if I had to.
Q But you are a bookie and
professional gambler. You surely don’t commit yourself to any expenditure
without weighing up the odds?
A Yes, I do. I am the biggest
gambler in Ireland. They’ve written books and done films about me.
Q So surely for you to succeed
you must study form?
A Yes, I do.
Q Yet on this venture you go
ahead without any checking whatever?
A This was a new venture for
me.
At the second
interview he added further on this topic:
Q Have you ever been to
Tattersalls before?
A Several times, but I have
never actually bought a horse.
Q How did you know which horse
you were going to buy?
A I didn’t know until the day
of the sales, but I knew it was the highflyer sales on then.
Q How did you get a catalogue?
A I bought one when I arrived
at the sales.
Q So, if you didn’t have a
catalogue until the day of the sales, how come you knew which horses were there
to be bought?
A It was in all the papers and
it was the premier sales.
Q And it is fair to say that
you also came to the sales, you say, to purchase a horse, yet you had made no
provision for financing the purchase?
A I was only 75 per cent
certain of buying the horse, and I could have raised the money.
Then later on,
again in the second interview:
Q What state were your
financial affairs in, in September?
A I couldn’t say. They are
always up and down.
Q You must have some idea.
A I’ve got no idea within
£50,000.
Q Well, tell us within
£50,000.
A I’ve got no idea.
Q Do you know what your
financial state is now?
A It was alright before
Cheltenham.
Q You said you went to the
sales with no financial backing.
A That wasn’t important. I can
raise it if I want to.
He
unequivocally accepted that the horse was knocked down to him and that the
gavel was pointed at him before it was banged. However, he added that he
thought the bidding was being run up against him.
He said that
after the auction he went to the rostrum and told them he had not made the
final bid. He said expressly that he did leave his name and that ‘everyone knew
him anyway’. However, in the second interview he said that no one ever asked
him for his name.
When asked why
he disappeared after the auction, he denied having done so and said he got a
lift with a man whom he did not know, whom he described as ‘a little fellow who
has a wig and drives a Mercedes’. In the second interview he said, ‘He’s an
old-time boxer. I can find out his full name. I have met him at the sales’.
At the second
interview when asked whether he had heard that there was an inquiry going on
about the auction he replied, ‘All I heard was that they were looking for the
underbidder’. However, later he said as follows:
Q When you were bidding, did
you think you were bidding against someone else?
A Yes.
Q Well, when did you doubt it?
A When the horse was resold.
Q How do you mean?
A Well, it got 200,000 at
resale.
Q You have told us you knew
nothing about the horse after the auction, yet you now obviously knew it went
for resale. Where did you learn that from?
A I discussed it with Jack
Doyle who is the head of the BBA in Ireland.
Q So that it is obvious that
you clearly knew there was a dispute and enquiry into the auction of 116, yet
you earlier told me you were unaware of that fact.
A I read nothing in the papers
but there was a lot of talk. I was at the sale at Goffs and there was a lot of
talk about it there.
Q But why didn’t you contact
anyone?
A I didn’t buy the horse.
In his written
statement, which I shall not read through, Mr Flood said that he ceased bidding
at 410. There was then a bid of 420. ‘The horse was subsequently knocked down
to me at 430,000 guineas, a bid which I immediately refuted in the auction
ring. . . . As I left Tattersalls that evening, I was under no assumption that
the horse belonged to me.’
When the
detective chief inspector was cross-examined, it became clear that there was no
challenge of substance to the content of the interview as recorded by him,
apart from the general and obvious point, which he readily conceded, that he
could not possibly have recorded by any means every word. So far as the financial
information was concerned, it was suggested that the matter was only approached
hypothetically and in general and not with specific reference to lot 116. This
the detective chief inspector firmly denied, saying that this was an important
aspect. Indeed, he was only talking about lot 116 and only interested in that
transaction and not generally. Nor did he agree that he told Mr Flood that this
was part of a much larger fraud investigation.
The detective
chief inspector agreed that Mr Flood had made it very clear that he was a very
well-known gambling figure in Ireland, and during the course of the day he had
checked up with the RUC and found that Mr Flood was well known to them, though
not, he stressed, in an adverse connotation. Mr Flood had also stressed that he
was from time to time a man of means.
It was also
suggested to the detective chief inspector that he had kept Mr Flood at the
police station until 6 pm for improper motives, namely to facilitate the
service of the third party notice by Tattersalls. He firmly denied this, saying
that he kept him there until 6 pm while investigating the information
concerning Mr Boyle. He had also been in touch with Tattersalls during the day,
and it was as a result of that contact that they must have learned that Mr
Flood was at the police station and were therefore able to serve him there.
I should add
that a substantial part of the police inquiry at this stage was directed
towards the suggestion that Mr Flood was a member of a ring at the auction and
that his companion was not Mr Boyle but another member of the ring. It is now
accepted by the police that his companion was in fact Mr Boyle.
Evidence of
fact called by second defendant
Mr James
Flood
Mr James
Flood, who comes from Belfast, said he is an on-course bookmaker who attends
racecourses both in Northern Ireland and the Republic and has done so for the
past 10 years, apart from a gap in the early 1980s, including 1983, when he
went with his wife to live in Marbella. He said he was a very well-known figure
in the racing world in Ireland and became headline news in 1983 when he was
dubbed ‘Ireland’s super gambler retires at 28’. He produced this and another
similar prominent newspaper article about himself.
He said he had
to go to court in Belfast every year for a certificate of character. He has a
turnover of up to £100,000 at large race meetings and up to £50,000 even at
smaller greyhound meetings. His assets when he went off to Marbella in 1983
were, he said, worth over £200,000, including his house, a 1981 Rolls Royce and
another motor car. He said he gambles if he thinks the odds are good and once
won £300,000 at poker from an Irish industrialist, though the debt had not been
paid. He had sometimes won £30,000 to £40,000 at backgammon but lost £70,000 during
the Cheltenham races in March 1983. He gave the names of a number of well-known
Irish trainers who, he said, attended the Tattersalls sale in September 1983
and who knew him well.
Mr Hugh Boyle,
his companion at the sales, whom he had known since 1976, he described as a
large wholesale butcher and a very wealthy middle-class Irishman. As to the
other members of the group he had described to the police, Mr Curley was a
close friend and a great name in the betting world and one of the wealthiest
men in Irish racing. Mr Furlong was a very large carpet wholesaler in Ireland.
Mr Flood said
that the first mention about the possible purchase of a racehorse was in
conversation with Mr Curley in the first part of 1983. Since he himself knew
nothing about breeding, the idea was that Mr Curley would advise him and would
also take a share. Later three shares were decided upon. Mr Curley told him
that horses were more lucrative than greyhounds. Later, in July, at Galway
races, more details were discussed, and Mr Curley advised that they must pay at
least £300,000 and suggested attendance at Tattersalls’ September sales.
On the Sunday
preceding the sales he, Mr Curley and Mr Boyle met at the Churchill Hotel in
London, he said. He and Mr Curley picked out three horses at the sale, namely
lots 62, 116 and 117. They each, according to Mr Flood, agreed to take a
one-third share, each setting a limit of £150,000, making a total of £450,000.
Mr Flood said he wanted the horse to race in his name, and the other two agreed
and also agreed that Mr Flood would do the bidding.
Quite apart
from the proceeds of the house, cars and other property in Northern Ireland, he
said he had cash in hand of £150,000 together with several bank accounts and
could also borrow from friends or as a last resort sell his wife’s jewellery.
On the Tuesday
he said he arrived at the auction at about 11 am and bid up to 300 for lot 62
and then dropped out. He had never attended an auction before and believed that
when a price was called out by the auctioneer, it meant a bid sought and not a
bid acknowledged. This understanding applied throughout to this particular sale
at Tattersalls.
He was then
shown the transcript of the bidding and also heard the tape and saw the video.
He said that at 400 he suggested to Mr Boyle, ‘let’s try 10 more’. The first
mention by Captain Watt of 410 was a question, not an acknowledgement of a bid.
After the 420 bid Captain Watt came back to him looking for 430. The first
mentions of 430 were questions not acknowledgements. He did not move his head
and did not bid 430 and did not appreciate that Captain Watt was knocking down
the foal to him till he heard the words, ‘I sell right behind’, at which Mr
Flood says he shook his head. Within 10 to 15 seconds he was having a dispute
in the bidding area with the man he now knows to be Mr Hillman, towards whom he
took two to three steps as Mr Hillman approached.
After
re-hearing the tape at this stage Mr Flood stated quite categorically that all
the figures spoken by Captain Watt were asking figures, all were questions
every single one of them, including all the 430s except the last.
When he first
spoke to Mr Hillman the latter proffered his pad, to which Mr Flood replied
that 430 was not his bid. Mr Hillman did not press him to sign, and nothing was
said about his name and address.
He then
watched lot 117, following which he accompanied Mr Hillman to the back of the
rostrum with Mr Boyle. At this juncture the bidding on lot 117 was in its last
lap.
His
conversation with Captain Watt lasted, he said, only about 45 seconds. Mr
Hillman suggested there was a problem, because ‘this bidder’, says he did not
bid 430. Captain Watt asked him two or three times, ‘Are you sure?’ or ‘Are you positive?’, to which he replied
that his last bid was 410. Mr Hillman then said, ‘Don’t worry. I know who the
underbidder is’. Captain Watt then sent Mr Flood on his way, saying, ‘There
must be a mistake; if you say so, it’s our problem’, and then walked away.
There was no mention of coming back in 10 minutes and he was never asked by
Captain Watt for his name and address, which he would willingly have given if
asked.
At the
conclusion he thought he was no longer involved. He was not surprised at
Tattersalls’ forbearance, as he knew he had not bid. Shortly afterwards he left
by car on a pre-arranged lift and did not vanish or abscond. He said that if
the horse had been knocked down to him at his last bid of 410, Mr Curley would
have arranged the finance with Tattersalls, since obviously he had an account.
This had been planned already and Mr Curley was present at the sale.
So far as the
police interview was concerned, he said that the detective chief inspector
began by suggesting that there was a multimillion pound swindle and that the
police were after the big-wigs, not him. In relation to the financial matters
discussed as quoted above, he said he did not tell the officer of the actual
financial arrangements as the officer did not ask him. They were only speaking
of things in general at that juncture.
At the outset
of his cross-examination by Mr Connell, Mr Flood said that he was an honest
man, though not a straightforward one, as a gambler must ‘go round the houses
to survive’. Everybody cheats at horseracing. But he would not cheat at cards
as he did not need to: ‘I am one of the best card players in the world’, he
said.
He was then
shown a passage in one of the press articles he had produced, and he accepted
that on one occasion, when he suspected opposing card players of passing
signals, he had ‘gone to the bathroom, filed his nails into points, marked the
cards, and taken every penny they had’. However, he would never initiate
cheating at cards.
So far as the
bidding was concerned, on his account, although Mr Curley, the knowledgeable
man, was present, he was content to leave the bidding to Mr Flood, who had no
knowledge. He agreed this was incredible, but everything was incredible in this
case. Mr Curley was in the United States, though Mr Flood had tried
unsuccessfully to contact him. So far as the police interview was concerned,
the discussion about financing in the first interview was ‘totally academic’
and, although the reference to Mr O’Toole reflected an actual conversation on
the Tuesday, the true answer would have been his evidence in court about Mr
Curley and Mr Boyle having agreed on the Sunday to join with him in the
syndicate. But he did not tell the police about all this, as the matter had not
been discussed in great detail at the interview.
When asked
about his finances, he said the house was sold for £102,000 in July 1983,
though there was a charge to the Bank of Ireland for £30,000 (or it might be
£13,000; he was not sure), but eventually in November 1983 (after the
Tattersalls sale) he thought that net proceeds of £60-£70,000 had been paid to
his wife. The furniture had been sold by his wife in July and realised about
£40,000.
one of them to the tune of a five-figure sum.
Mr Flood was
next asked about his affidavit of documents, verified by an affidavit sworn by
him, on May 22 1985, only 10 days or so before the start of the trial.
Five months
before, in December 1984, Tattersalls’ solicitors had addressed a very proper
letter to Mr Flood’s solicitors seeking specific discovery of ‘all documents
relating to your client’s ability to have paid 410,000 guineas or to have
raised such a sum had the horse been knocked down to your client at that
price’.
Apart from
inter-solicitor correspondence, etc, there were only two documents or sets of
documents disclosed on discovery, namely:
(1) In Schedule 2, covering documents which have
been but are no longer in the deponent’s possession or power, the file of
Oliver J Kelly, his solicitor, relating to the sale of the house in Belfast. In
other words Mr Flood was swearing here that this file which had existed was
lost.
(2) A letter from Mr Kelly himself of Washington
House, Belfast, dated May 17 1985, which was produced and which read as
follows:
I act on
behalf of Mr James Flood formerly of 2 Sheridans Drive, Helens Bay. When he
left Northern Ireland in the early part of 1983 he left his affairs in my care.
His house at Helens Bay together with the contents thereof was put on the
market at an asking price in the region of £120,000.
His Rolls
Royce Silver Shadow car was also for sale.
These
transactions went ahead in the latter part of 1983. At that time Mr Flood,
together with his family, had taken up residence in Spain.
It will be
noted that there is no statement there of the price realised either for the
house or for the Rolls-Royce motor car nor, be it noted, and still more
importantly, is there any reference in that letter to the missing file. There
is thus no disclosure on discovery of any of the many bank accounts Mr Flood
had referred to, nor of tax and Customs and Excise returns, which he said he
regularly made. When asked again how he could have paid his £150,000 in
September 1983 he said that this would not have presented a problem,
particularly in view of his cash in hand, which in this answer he assessed not
at £150,000 but at £80,000. Today he would be unable to pay more than
£50-£60,000, and that would be obtained by borrowing. He now lives in rented
accommodation in Belfast.
Mr Connell
then cross-examined Mr Flood in detail about the bidding, and the tape was
played more than once. When taken through bid by bid, he eventually accepted
that all the figures announced by Captain Watt prior to 410, other than the
obvious questions, were in acknowledgement of a bid and not as invitations for
a further bid. However, he still adhered to his assertion that the early
mentions of 410 and 430, respectively, were questions and not acknowledgements.
He had not protested immediately the horse was knocked down to him because, he
said, he did not want to start screaming his dissent in public.
He agreed that
the conversation with Captain Watt was after lot 117 and that he had misled his
counsel about timing during the cross-examination of the Tattersalls witnesses
when it was put earlier. When challenged on his conversation with Captain Watt
he reiterated that Captain Watt had never once asserted that he had bid 430 but
had freely accepted his denial and had agreed that there had been a mistake
which was all Tattersalls’ fault.
Mr Hugh
Boyle
Mr Hugh Boyle,
who comes from Co Down, owns off-course betting shops and also carries on
business as an on-course bookmaker. He also has butchery, bakery and grocery
businesses, which date back well before 1983 and, he said, have a combined
turnover per annum of over £200,000.
He said that
the idea of owning a racehorse was first discussed by him with Mr Curley, and
he agreed that he would be a shareholder in a horse. There were subsequent
discussions, sometimes with Mr Curley but mainly with Mr Flood. He said they
all three met at the Churchill Hotel the Sunday before the auction and that Mr
Curley had suggested three lots as possible bidding targets. They agreed a
maximum total outlay of £150,000 each.
He had not
£150,000 cash available but could have arranged the finance through bank or
finance companies. He had not made previous inquiries, as he had never been
turned down previously when seeking finance. It was agreed that Mr Curley would
arrange the finance meantime, perhaps through an account at Tattersalls, and he
expected to have about a month to pay his share.
He attended
the auction with Mr Flood, and when lot 116 came up followed the bidding
closely. After the 400 bid, Mr Flood asked him, ‘Would you like 10 more?’, to
which he replied, ‘OK. Whatever you think’. Mr Flood’s final bid was 410. After
the horse was knocked down at 430 Mr Flood said, ‘the horse has been knocked
down to us. We’ll have to go and see them in the office’. They then proceeded
to the rostrum, and Mr Flood said he had not bid 430. There was mention from
Tattersalls of a mistake, and one man said he knew who the underbidder was. It
all lasted about two minutes. Names and addresses were not asked for, and there
were no arrangements made for them to return. He himself was asked nothing. The
auctioneer did say the bid had been made, and he thought it was a serious
matter till he got to the rostrum, where he was surprised it went off so
quietly. He said he was first asked to remember these events only three weeks
ago. Only two recollections were vivid in his mind — namely, the two brief
conversations with Mr Flood just before and just after the horse was knocked
down.
In cross-examination,
he said he had no knowledge of the breeding of horses, and this was pure
novelty. He could have found £50,000 in cash from the cash-flow in his
businesses. Mr Curley was present at the auction but not alongside Mr Flood and
himself, although he would obviously be required to sign any documents
confirming a sale. He thought both Mr Flood and Mr Curley would have to sign
such documents. When they went round to the rostrum, he was worried and thought
it was unbelievable when Tattersalls did not hold Mr Flood to his bid but let
him go. He was amazed, though not relieved, to get away. He denied that he had
left post-haste.
This concludes
my summary of the factual evidence and I now turn to the expert evidence.
The
plaintiffs’ expert evidence
Mr Jonathan
Irwin
Mr Jonathan
Irwin is the managing director of Goffs Bloodstock Sales Ltd, who are now the
second largest auction house in Europe after Tattersalls, and rank fourth in
the world, Fastig-Tipton and Keeneland in Kentucky being the two largest. He has
24 years’ experience in the bloodstock industry and had considerable experience
of auctions throughout the world.
He gave a
written statement of which the salient features are as follows:
Disputed bids
do occasionally happen. Any experienced auctioneer would have experience of
them and should be able to handle them. One form of dispute is when the
purchaser does not prove his credit rating with the finance department. This is
done within 15 minutes. The purchaser is taken to the credit office. One puts the
horse back as soon as possible. It is best to sell the horse back into the same
marketplace.
A more rare
example is when someone denies a bid or runs away. This happened, for example,
at one of our sales in October 1984. It was knocked down to a man unknown to us
for 50,000 guineas and he just disappeared.
Mr Irwin then
refers to some tape recordings I need not read:
I immediately
announced what happened and put the horse back and it sold for 50,000 guineas.
This is the invariable practice internationally and also as far as we are
concerned and at Fastig-Tipton and Keeneland.
. . . .
The first
thing we at Goffs do if there is a dispute as to the bid is to advise the
vendor of the problem and to tell him that we are going to put the horse back.
I understand
that it took Tattersalls some twenty-four hours to come to their decision to
re-auction the horse, because it was only on the Wednesday evening that it was
announced publicly that the lot would be re-submitted the following day. If
such an occurrence had happened at our auction, we would have reacted
immediately and not waited that period of time. The only reason why we would
not put a horse back straight away is if it is physically impossible for
reasons of time not to do so, but in any event we would announce there and then
that the horse would be submitted, say, the following day and at what time, so
that people at the auction would know and have the chance to come back. We
would not think it wise to approach an underbidder to ask him whether he would
buy such a horse as opposed to putting it back into the auction.
In
cross-examination Mr Irwin agreed that Captain Watt faced a nightmare
situation. He disagreed that it was essential to make the underbidder aware of
the resale, and, though of course he would wish him to be there and would do
his best to ensure that he was, he would not hold the re-auction up because the
underbidder had left. Prompt re-auction was the way to make the best of a bad
job.
At the
conclusion of his cross-examination Mr Irwin stated as follows, and I quote:
Q What you are saying is that
you are in a bad situation anyhow: what you are doing is making the best of a
bad job?
A Absolutely.
Q And this [ie immediate
re-auction] is the best way of making the best of a bad job? Is that right?
A That is absolutely correct.
Q It may be the best way in
your view, but it is not the only way. I suggest that another perfectly
reasonable view to take is, first of all: ‘We will not go ahead because we do
not know where the underbidder is and we have not been able to tell him.’
A That is a commercial
decision. I could not agree with you more. You know, it might be different in
any house, but what I am being asked for is my opinion and what I would do, and
that is what I would do.
. . . .
Q [The other decision in
question here is] ‘I will not proceed until I know that the underbidder has
been told.’
A It is not unreasonable at
all, no, not unreasonable.
. . . .
Q Is it reasonable to give
[the bidder] his 24 hours’ grace and try and make sure the underbidder is going
to be there and then leave everything else meantime?
A I would be so frightened at
this stage that I would have done something else, but I am not saying that it
is unreasonable to do what Tattersalls did. . . . They are probably one of the
best auctioneers in the country — in the world — they have got an unbelievable
amount of experience and it is not for another house to say that it was
unreasonable for them to do that; it is putting me in an awkward position, but
if you are talking about what I would do in that situation, I would have
reacted there and then.
. . . .
Q In the context of this case,
you know the steps that are said to have been taken by Tattersalls. At the
moment they are said by me to have been taken. One, do our best to persuade
this man that we know he bid; two, get in touch with the underbidder and see if
he will still stand by his underbid and await those two developments.
A Yes. The only thing I would
not have done is I would not have gone to the underbidder.
And then he
explains why:
Q Are you saying that it was
wrong of them not to [put the horse up again]?
A No, it was their decision,
it was their auction house. I am being asked what I think.
Q In your opinion, as an
expert in the matter, is it a perfectly tenable view for them to pursue?
A It is what they did pursue.
Q Is it, in your opinion, a
perfectly tenable view for them to pursue?
A It is understandable, what
they did.
Lt Col
Richard Warden
Lt Col Richard
Warden is the director of the Curragh Bloodstock Agency which owns
establishments both at Newmarket and at Newbridge, Co Kildare, in Ireland. One
of the clients for whom he acts is Sheikh Mohammed, another of the four sons of
the ruler of Dubai. He himself has frequently attended auctions in the United
Kingdom and throughout the rest of the world.
He provided a
written statement of which the salient passages are as follows:
I attended
[the sale] in the autumn of 1983 . . . [and] I remember that the Riverman colt
was a nice yearling.
The usual
practice of auctioneers both in the United Kingdom and internationally is that
if there is any problem or dispute over the bidding for a horse to be sold at
auction the animal is put back into the ring that day or at the soonest
possible time thereafter. I cannot understand why Tattersalls did not do so on
this occasion. In my view, given the fact that there was a dispute over the
bidding for this colt, then the auctioneer should have put the horse back in
the ring that afternoon or, if there was insufficient time, the next morning.
In practice auctioneers should try to make time for the horse to be put back
that very same day. The auctioneer should have announced publicly that very
afternoon that there was a problem and should have stated when the lot was
going to be re-sold.
The Tuesday
of the Highflyer Premier sale was when all the big purchasers were present.
That was the time to sell, given that the auction itself (and the very large
prices being obtained) created a certain atmosphere which would encourage
people to pay good prices for the yearlings. In my view, if this colt had been
put back that afternoon, there was a reasonable chance that the horse would
have fetched a good price. . . . I certainly think that the good bidders would
have stayed if the horse had been brought back. The good bidders were there
anyway.
And then he
cites an example of a sale that he attended in Lexington, Kentucky, where there
was a disputed bid and then the horse was put up again into the ring that same
day.
He then said
that he left after lot 116 but returned later and the crowd was then ‘thinner’:
onlookers had gone and some bidders, but there were still a good many people
there.
In
cross-examination it was put to him repeatedly that Tattersalls acted
reasonably in trying to hold Mr Flood to his 430 bid, particularly as Mr Flood
admitted that he had bid as high as 410, and in trying to find the underbidder.
Col Warden did not demur but stressed time and again that the auctioneer should
at the same time make an announcement of a possible re-auction in order to keep
people on the boil. This re-auction should, he said, take place at the nearest
time possible, which might be that evening or the next day, provided always a
clear announcement of the date and time for the re-auction was made. After the
bidder himself, he said, the underbidder was the next most important person in
such a situation, whom it was desirable to have present, but it would not be
wrong to proceed with the re-auction without the underbidder if he could not be
found.
This part of
his cross-examination concluded as follows:
Q It is a perfectly reasonable
thing for the auctioneer to do in that situation to say to himself, ‘The best
thing I can do for my client is to keep this man to this bid’.
A Yes. And, at the same time,
to say that there is trouble and the animal will be sold at a certain time to
keep the other people on the boil.
Q You add that, but if you say
and publicly announce that the animal will be re-sold —
A You antagonise the other
man.
Q You have immediately taken
the pressure, if I may so put it, off the bidder.
A That is a risk that is up to
the auctioneer.
Q Does it not come to this,
Colonel Warden, at the end of the day, it is a very difficult situation?
A Extremely difficult.
Q And it is very difficult for
anybody to say what is the right and the wrong course.
A Very difficult.
Q Either one of the courses
would have been perfectly reasonable.
A Yes.
Then there was
a discussion about rule 4(c). The passage concluded:
Q Before you can condemn him
[ie the bidder] you have got to give him some time to decide whether or not he
is going to come clean, have you not?
A Give it all the time you
like but make an announcement so that you re-sell the animal and keep people’s
minds on the fact that the animal is not actually sold: that there is an
argument going on.
Col Warden
said that the 430 had been an excellent price and he agreed that on a
re-auction the price might well be less and that is a risk that the auctioneer
must take into account. In fact, in the example he gave from Kentucky the final
price was, he thought, some $700,000 below the underbidder’s final price in the
first auction.
Dr Arnold
G Pessin
Dr Arnold G
Pessin is a doctor of veterinary medicine in the United States and between 1965
and 1978 was the owner/manager successively of two large horse-breeding
establishments. For the last seven years he has been a veterinarian bloodstock
consultant in the United States. He has attended public auctions throughout
North America, Europe and elsewhere, and attended auctions at Tattersalls on a
number of occasions between 1956 and 1970. His main attendance at sales,
however, has of course been in Kentucky. His evidence as contained in his
report and so far as relevant is as follows:
The horse
market is a universal market. Many of the same buyers and sellers are found at
auctions throughout the world. Bloodstock is an international commodity. . . .
I consider I am fully able to comment on good auctioneering practice in
England.
. . . .
Given the
facts of this case as I understand them, ie, that the alleged final bidder on
being asked by the spotter to sign the slip denied making the bid and did not
sign the slip and further repeated his denial to the auctioneer behind the
rostrum and then did not return, then I do not understand how any reasonably
prudent auctioneer could have done anything other than put the horse back
immediately. He would do so in order to present the horse to the underbidders
who were present.
I cannot
think of any valid reason for not putting the horse back.
In my opinion
there is no question about there being insufficient time to resell the horse.
The horse could have been brought back and certainly the auctioneers should
have publicly and immediately announced the problem and that there was to be a
resale so that prospective bidders would know about it.
I understand
also that Tattersalls offered the horse to one of the underbidders. In my view
it would not be sensible to do this. By doing this you defeat the purpose of
the auction. . . . The auctioneer by offering the horse to an underbidder is
negating his instructions from his vendor.
The sale of
lot 117 for a record European sum could only enhance the value of yearlings and
encourage people to bid higher prices. If the colt had been reintroduced, there
is every prospect that the sharp rise in the market could have resulted in the
colt fetching more than the 430,000 guineas.
Then in a
supplementary statement he gives a number of examples where horses have been
re-auctioned immediately, as he says this one ought to have been, in the United
States.
Expanding his
evidence in more detail on the position immediately
10 minutes between this juncture and the notification to the auctioneer was
strange. The horse could have been brought back to the ring, and an
announcement made that a problem had arisen so that lot 116 might be put up for
resale. Such arrangements were usual and were made as soon as the auctioneers’
staff realised that there was a potential problem.
So far as
concerns the period immediately after the auctioneer was informed, Dr Pessin
expressed the opinion that it was flogging a dead horse once Mr Flood’s
unwillingness to give his name or sign the form was confirmed, and that there
was no need for the auctioneer to obtain corroboration of the bid, since he
himself had seen it and was supported by two spotters. For so valuable a horse,
expedition was necessary. Pending a further check by a person in authority with
the bidder, the horse should have been brought back to the vicinity of the ring
and a public announcement made that there was a problem, so as to hold matters
in readiness for a re-auction, if such proved to be necessary, before the same
audience.
Dr Pessin said
that there was a splendid chance of a good price with the spotlight of
attention having been focused on the horse by the announcement of the resale.
He said it was unnecessary to ensure that the underbidder was still present,
though obviously it was preferable to have him there. Dr Pessin adhered to the
view that it was unwise to offer the horse to the underbidder, since, in such a
situation, the underbidder would be in an unduly strong position and able to
negotiate the price down.
Tattersalls’
expert evidence
Lt Col
Robert Hastings
Lt Col Robert
Hastings DSO MC is chairman of the British Bloodstock Agency and has worked for
them for the past 33 years, of which 15 were as a director and over 16 as
chairman. He has attended bloodstock auctions all over the world.
He compiled a
written report, which, so far as relevant, is as follows:
If it had been
possible, it would clearly have been better to put the colt up for auction
immediately (ie before the sale of lot 117). However, the dispute by the
purchaser did not arise until the next lot was already in the ring . . . .
The first
Captain Watt knew of the dispute was after the sale of lot 117 when the
purchaser refused to give his name and address and maintained that he had only
bid 410,000 guineas. At this stage, it would have been open to Captain Watt to
put the colt up for auction again. Of course, with the benefit of hindsight it
might have been possible to have resubmitted the colt there and then, but I
must have regard to the facts of the situation, and at the time there were
sensible reasons for not doing so, eg the lateness of the hour, the fact that
Saleroom was emptying rapidly, and the fact that the purchaser was not saying
that he had not bid at all, only that he had bid 410 as opposed to 430.
. . . .
As to [the]
point [of putting it up on the third day] I would agree that those individuals
who are major international purchasers of yearlings would probably have left
the sale after the first day. However, any such individual who was seriously
interested . . . would have left instructions with his agents to bid on his
behalf.
As to [the]
point [of the price likely on the third day] I consider it right to say that
the price likely to be obtained for the colt on the third day of the sales
would be less than it was on the first day but not necessarily less than its
proper value. The reason for this is that on the first day, at the height of
the sales, the prices are inclined to be inflated. . . . In view of the very
limited alternatives open to Tattersalls, bearing in mind the refusal by the
underbidder to take the colt, I consider that there was no realistic
alternative but to offer the colt again on the third day.
Supplementing
his report, he said that he saw the Riverman colt and would have expected it to
be worth the average value for a colt of that sire, namely about 200, though if
there were lots of bidders it might be higher. So far as resubmission on the
Tuesday evening was concerned, he amplified his evidence by saying that
normally it is better to put a lot straight back, but if there is a dispute
after bidding has closed, it is very difficult to explain to the public why the
lot is going back in. Usually an underbidder would be disinclined to bid,
unless he knew the reason for the resubmission very clearly. In a case like the
present, the underbidder might be more disinclined, since he would suspect that
there had been some monkey business. However, if there had been other bidders
at earlier stages, it is likely they would come back in again up to their
limit. The British Bloodstock Agency were the buyers of the last two lots, lots
125 and 126. They were both good prospects and were expected to realise about
150, and the BBA only came in because they seemed to be going for less. He was
therefore surprised at the time in both cases at the much lower prices realised
(82 and 78, respectively) and this occurred perhaps because it was late in the
evening and many people had gone home.
Finally in his
evidence-in-chief, Col Hastings was asked what the prospects were if the colt
was brought back the same evening, bearing in mind that the auctioneers only
knew of the difficulties after the completion of lot 117. He replied:
At that time
of the evening certainly the casual buyer had gone and a lot of people would
not have heard that he was coming in and therefore there would be a
considerable disadvantage in putting him up then. If the original people who
bid for him had wanted him, they would bid for him at any time if they were serious
about it.
In
cross-examination Col Hastings agreed that for this particular colt, which was
a very good foal but not in the lot 117 class, it was important to get it into
the sale on the first select day. So far as re-auctioning the same evening was
concerned, Col Hastings said it was a question of time. If the problem had
arisen much earlier, it would have been very much better to put it back in that
day. However, it is always more difficult when another lot has come in, and the
problem then is one of explanation to the audience. He proceeded:
Q The disadvantage of bringing
him back in again is that there are those, are there not, who think: ‘Why has
it gone wrong the first time round?’ and
they might be put off.
A There is certainly always a
stigma.
Q But, of course, that stigma
exists if it were sold a couple of days later too, to those who are
knowledgeable, does it not?
A There is more time to
explain why the first sale fell through.
Q But, of course, those
explanations may still leave a stigma, might they not?
A Oh, yes.
Q But if you are a person who
has access to a system of announcement, then I suppose it would not be much of
a stigma to say: ‘There has been a dispute over the bidding . . .’ or ‘a
problem over bidding and the horse is being put in again as soon as
possible.’ That would not really make
things very awkward, would it, for the seller?
A Well, I think it would be
quite understandable in America, but in the way things are normally run by
Tattersalls it would be so surprising as to constitute a stigma of sorts.
He was then
asked a bit later on:
Q You may or may not agree
with it, but what one or two of the witnesses said . . . was that here you have
a bad situation, you have this disputed bid, the horse has gone but to make the
best of a bad job the best thing is to bring it back as soon as possible that
evening.
A I think, my Lord, that is
probably so. On the other hand, I am not sure in this case that it was
discovered that really the horse would have to be re-submitted until it was too
late to bring him in.
In the present
case it would be difficult to get the horse back in before lot 126, and if it
was put up last of all, that would likely to be detrimental to the sale.
In conclusion,
he said:
Q What is the right thing to
do?
A It’s time. I think you have
to put the horse up again. Had it been the middle of the afternoon, it would
have been wiser to put the horse straight up that evening.
Q . . . Really, what it comes
down to, boiling it down to its absolute smallest size here, is that it is a
question of the timing: put it up the same day, provided you have got time to.
A That is right, . . . yes.
Mr Paul
Whitfield
Mr Paul
Whitfield is a director of Christie’s and is very experienced in conducting
sales of works of art at auctions in their salerooms in St James’s and also in
country house sales on the spot. He submitted a written report of which the
salient parts are as follows:
Lot 116 was
near the end of the session, at which stage it would have been hard to re-offer
the animal. Additionally, the existence of a dispute was not known to the
auctioneer until after . . . 117 had been sold. At Christie’s our conditions of
sale allow the auctioneer in his absolute discretion to re-offer a lot
‘immediately after the sale of the lot’ if in his view a dispute has arisen. In
other words, if on the fall of the hammer a bidder shouts out an objection, and
the auctioneer considers his objection to be justified, the auctioneer then has
the right (but not the obligation) to re-offer the lot. On the fall of the
hammer on . . . 116 it seems to me that it was plain there was no immediate
dispute. The auctioneer clearly pointed out the bidder, having identified his
location in the saleroom during the bidding and the ‘spotter’ knew exactly
which bidder he had to approach.
. . .
. . . It
seems to me quite reasonable that Tattersalls should have first sought out the
underbidder to see if he would take the colt. Upon his refusal to do so, Tattersalls
then put up the colt for auction on September 29 in the next available sale of
high quality bloodstock. It is never possible to replicate the events of a
particular sale even minutes afterwards, as the existence of a
Tattersalls could not have known that the price on the second occasion would
necessarily be less than on the first, but in the event it is no surprise to me
that the underbidder did not again enter the bidding. Had the colt been
re-offered within hours, or even minutes, of the dispute, I would have expected
the reaction of the underbidders and others to be hesitant.
In conclusion:
Having
considered all the material made available to me, I consider that the auctioneer,
Captain Watt, an undoubtedly experienced auctioneer, did indeed act prudently
both in the conduct of the sale of lot 116 . . . and in his subsequent actions.
I also consider that Tattersalls took the steps that a reasonably prudent
company would have done in the circumstances of this case, and in the context
of the best standards of auctions sales as conducted in this country.
He
supplemented this report by saying that as the problem only became known after
the sale of 117, there were great difficulties in immediate re-auction, which
he very seldom found successful. In such circumstances bidders are likely to be
shy and frightened off. It was a natural first step to investigate a possible
approach to the underbidder.
In
cross-examination he agreed it is appropriate to try to take advantage of any
inflationary prices offered at the auction before the excitement evaporates,
but the correct approach was to seek out the underbidder and then perhaps go
down the bidding steps to further underbidders. If none could be found, the
obvious course is to get hold of the market before it disappears, but the
search for the various underbidders might take several days.
At Christie’s
he would never re-offer unless the dispute was known before the next lot was
put up, since any subsequent re-auction the same day was almost bound to result
in a fiasco. In fact, such a course was never a practical possibility at
Christie’s anyway, since the same auctioneer always remained on the rostrum
throughout and would therefore have no opportunity to investigate in
circumstances similar to the present case. Moreover, re-offering at the same
auction at Christie’s would also be severely handicapped if, as was often the
case, pictures or furniture were sold successively in groups, so that, for
example, it would be inappropriate to re-offer a Dutch picture during the
auction of an ensuing block of French pictures.
He had never
attended a bloodstock auction and had no experience of the sale of bloodstock,
and the differences between the two commodities and the different factors
involved made him cautious in venturing into the other world. However, in
general, he felt strongly that, at the end of the sale, whatever the commodity,
the atmosphere tends to crumble, though perhaps less so in a Tattersalls’ sale
because of the alphabetical order of the lots. But as each lot went by, it
would become more difficult to retain the attention of the audience. An
announcement might retain them, but it was very risky and something he would
not rely upon.
In any event,
in a situation like the present, the auctioneer needed time to explore the
various possibilities.
Mr David
Royle
Mr David Royle
has since 1967 been a partner in Hollingsworths, a well-known firm of valuers
and auctioneers and senior partner from 1975. He has very wide experience of
auctioning in the fine arts, antiques and furniture spheres. He is also
vice-chairman of the Furniture and Works of Art Committee of the RICS and is
past-chairman of the Fine Arts and Chattels Committee of the ISVA.
He provided a
written report from which I quote the salient passages:
The first
Captain Watt knew of any dispute on lot 116 was when he came down from the
rostrum having sold the next lot. This appears to have been some ten minutes or
so after the disputed sale, so he had not been in a position to put the colt up
for auction again immediately in any event. Furthermore I understand that by
the time discussions had taken place with Mr Flood . . . not only was it
virtually at the end of the first day’s sale, but many potential bidders had
drifted away following the spectacular sale of lot 117 . . . More importantly,
I consider it would have been quite contrary to the vendor’s best interests to
have re-offered the colt in these circumstances, as a disastrously low realisation
would have been extremely probable.
I take note
that Captain Watt states he is quite certain that Mr Flood bid at 430,000
guineas and that he had properly knocked the lot down to Mr Flood at that
figure. In the light of this certainty, it is my opinion that Captain Watt
acted reasonably in protecting his vendor client’s interests by insisting on
holding Mr Flood to his part of the bargain and not allowing him to escape
therefrom . . . I consider it reasonable for him at that stage to have decided
to hold Mr Flood to his bargain and not to re-offer the lot even if it had been
practicable to do so.
On all these
matters I am, of course, strongly influenced both by the inherent probabilities
and by my assessment of the credibility and reliability of the various
witnesses, all of whom I had ample opportunity to evaluate throughout detailed
examination and cross-examination.
Then in his
conclusion he said:
It is my
opinion that Tattersalls Ltd discharged their duty to the vendor with
professional care and assiduity. I consider . . . that proper procedures were
clearly carried out throughout the sale of this particular lot. Furthermore, I
consider that Tattersalls Ltd acted in the vendor’s best interests as the
situation developed after the sale, and that even now with the benefit of
hindsight and full knowledge of the situation, I still consider that they
acted, stage by stage, with the proper concern to achieve the best possible
result for the vendor.
In expansion
of his report he said that this was not a dispute but a default, a dispute
being essentially a problem emerging in the saleroom at the time of sale. This
particular situation was without precedent in his experience, with the
combination of the supposed final bidder only claiming afterwards that he had
not bid and then refusing to give his name and address. In the circumstances he
would have reacted the same as Captain Watt. Captain Watt could have got
himself off the hook by re-offering straight away, but in Mr Royle’s view this
would have been a disastrous exercise and open to real criticism under the
general duty of care.
There would
have been six reasons why it would have been wrong to re-offer that same
evening:
(1) It was established that the underbidder was
not present. Even though in his experience it was true that underbidders would
frequently not bid again he would never dare risk discounting the value of the
underbidder’s presence.
(2) There was still a possibility (albeit
receding) of Mr Flood completing the deal.
(3) The lateness of the hour after a very long
day and the proximity of the end of the sale that day.
(4) Many people had dispersed after lot 117.
(5) There was insufficient time for adequate
publicity.
(6) He was convinced that any amount of
explanation from Tattersalls would not have allayed potential buyers’
suspicions. To allay such suspicions there must be an opportunity for a buyer
to reinspect the lot in question.
This he
elaborated by saying that in the fine art world the auctioneer never re-offers
if a lot is challenged on authenticity. Here the potential new bidder might
suspect that Mr Flood had, as the colt left the ring, spotted some defect in
the animal and would therefore wish to reinspect it before bidding. A potential
bidder might even, he considered, have thought it necessary to re-examine the
colt’s pedigree, thinking that there must be more in Mr Flood’s refusal than
met the eyes.
When asked
about the approach to Mr Goodbody, Mr Royle said that it was prudent for
Captain Watt to contact the underbidder to see if he would stand by his bid.
In
cross-examination Mr Royle was asked about condition 4(c) and said that if he
had been in the auctioneer’s position, he would have concluded that 4(c) did
not preclude the right of Mr Flood to return and say, ‘I’ve sorted it out
within my 24 hours’ limit’, so that if Tattersalls had disposed of the horse
meantime they would have been in a vulnerable position.
When it was
suggested to him that a true explanation of what had happened would have
allayed any suspicions, he answered that, in his view, such a statement, even
from so reputable and authoritative a source as Tattersalls, would not be
successful.
At the
conclusion of his evidence he said that the two most important points were the
potential buyers’ suspicions leading to a need to reinspect the horse, coupled
with the point that under clause 1 4(c) Mr Flood had 24 hours’ grace, and they
together ruled out entirely any question of re-auctioning the same evening.
Findings
My
findings of primary fact
I now proceed
to make my findings on the crucial issues of primary fact.
Did Mr
Flood bid 430 and what happened between him and Tattersalls immediately
afterwards?
I start my
consideration of this very important aspect of the case by referring to the
firm and indisputable evidence contained in the sound recording and the video.
As already noted, there is no difficulty whatever in distinguishing those few
occasions when
many other occasions when there was no such indication in his tone of voice. It
is, moreover, perfectly clear from the video that on each of the bids through
the 300’s up to and including 410 Mr Flood signified his bid by his nod before
Captain Watt named the figure by way of acknowledgement. Indeed Mr Flood
himself (having said quite the contrary in his evidence-in-chief), acknowledged
this in cross-examination so far as the bids throughout the 300s were
concerned, although he still contested it in relation to the first mentions of
410, but this contest was not maintained by Mr Martin having regard to the
indisputable evidence of the video itself.
After the very
quick bid at 420 (to which I shall be referring in more detail later) the
bidding then lingers for a considerable period at 430.
At this
junction Captain Watt mentioned the figure 430 no less than six times, and each
time in exactly the same tone of voice as he had used earlier in
acknowledgement of bids already made. Finally, in the clearest possible words,
just before the drop of the hammer, which Mr Flood admits were palpably
directed at him, Captain Watt said, ‘I sell right behind at 430. Any more? Right. Bid’s in the window at 430,000
guineas’.
I now turn to
the inherent probabilities.
While fully
accepting Mr Martin’s submissions that auctioneers do sometimes make mistakes,
as the evidence in this case shows, I think it is most highly improbable that,
if on this bid a mistake had been made, Mr Flood would not have pointed it out
straightaway by shouting out a denial when the 430 was repeated so many times,
and in terms which eventually he appreciated were being directed specifically
at him. Mr Flood’s explanation of this is that he was shy and not wishing to
make a scene in public. But, in fact, Mr Flood is anything but shy, as is
evidenced not only by his demeanour in the witness box but also by his
self-assessment of his own character as flamboyant, though I think bombastic
would be a better description.
I also think
it extremely improbable that Tattersalls, in their firm belief (which Mr Flood
does not challenge) that he had indeed bid 430 would meekly have accepted his
denial, said it was all their fault, and let him go. On this (if on little
else) I agree with Mr Boyle when he said he found such forbearance by
Tattersalls incredible.
So far as
credibility is concerned, I found all the Tattersalls’ witnesses who gave
evidence entirely honest, straightforward and convincing witnesses, who were
prepared to make concessions, even if not advantageous to their case, and who
approached their evidence in a thoroughly responsible fashion. I wish I could
say the same for Mr Flood.
Although his
almost boastful admission that he cheats at gambling was engagingly frank,
there can be no doubt that Mr Flood has lied on material issues both to the
police and to this court. He lied to the police when asserting that he had
given his name and address and when feigning ignorance of the hue and cry
following the auction. He lied to this court in his repeated assertions in his
evidence-in-chief that he thought all figures mentioned by Captain Watt were
interrogative, and in some at least of his stories about his means in September
1983. He was also clearly intending to assert that the interview with Captain
Watt took place in the few fleeting moments between lots 116 and 117 to bolster
a case that the interview was therefore necessarily brief and perfunctory,
until he realised from the evidence of the timing that this was untenable and
so shifted his stance.
There are
other highly unsatisfactory aspects of his evidence. When first asked by the
detective chief inspector about the selection of the colt for bidding, he
attributed it more than once to Mick O’Toole — and on the very day of the sale.
Mr Curley and Mr Boyle were only mentioned as potential investors who might be
roped in after he had bought the colt, and each of them was allocated a quarter
share, with Mr Noel Furlong also joining in. There was no mention to the police
of a firmly established syndicate agreed at the Churchill Hotel two days
before. Mr Flood’s suggestion that this part of the interview with the police
was purely academic is quite ludicrous, since this was the one topic which the
police were investigating and which had led to his arrest. Moreover, if Mr Curley,
with his experience of racing and racehorses, was a quarter participant, it is
almost inconceivable that he would have allowed an entirely inexperienced tyro
like Mr Flood to do the bidding, still less without standing beside him to make
sure he bid correctly. I strongly suspect that the so-called syndicate is
illusory.
Equally
unimpressive is Mr Flood’s evidence of his financial ability to meet even his
own asserted share of £150,000, let alone a bid of 410,000 guineas. If his
evidence were true or even partly true, there must be a number of disclosable
documents such as bank accounts, tax returns, and the like, quite apart from
the absent correspondence about the sale of the house in Belfast, of which the
explanation is totally unsatisfactory. Mr Martin’s valiant attempt to explain
this aspect away by saying that Mr Flood’s attitude to such matters was
‘cavalier’ was, I regret to say, extremely lame.
Taking all
these matters into consideration I am driven to the conclusion that Mr Flood’s
evidence is wholly unreliable.
So far as Mr
Boyle is concerned, I do not either need or wish to say any more than that I
found most of his evidence unconvincing, particularly since those parts which
dealt with the alleged syndicate to buy the horse are undermined for the same
reasons as I have given in relation to Mr Flood.
Consequently I
accept the evidence of the Tattersalls’ witnesses in preference to that of Mr
Flood and Mr Boyle, and I find as facts:
(1) That Mr Flood did bid 430,000 guineas and
that he knowingly intended to make this bid.
(2) That he did not shake his head before the
hammer fell.
(3) That he did refuse to give his name and
address, both implicitly to Mr Hillman when he refused to sign the form and
explicitly by word of mouth to Captain Watt when Captain Watt expressly asked
him to do so. No doubt the former is of its very nature a less unequivocal
refusal than the latter, but I am quite satisfied that Mr Flood was at all
times refusing to identify himself.
(4) That the conversation with Captain Watt
fasted upwards of five minutes and that during its course Captain Watt
repeatedly and unequivocally asserted that Mr Flood was the final bidder and
never at any time accepted or purported to accept Mr Flood’s denial.
(5) That at the end of this conversation Mr Flood
was expressly asked to come back after 10 minutes and promised he would do so.
(6) That thereafter Mr Flood and Mr Boyle
absconded by leaving the sale with the greatest possible haste. It is
inconceivable that Mr Flood could have prearranged a lift with a man whom he
did not know and whom he was only able to describe in such improbable terms in
the police interview.
I also wish to
make it clear that I reject all Mr Flood’s criticisms of the conduct of the
police.
I should add
that during the course of his evidence Mr Flood made a number of very serious
allegations affecting the integrity both of the plaintiffs, Alchemy
International, and of their representatives, in particular Mr Henry Cecil.
These allegations did not go to any issue in the case and amounted to no more
than bare assertions unsupported by any evidence. It was disgraceful that these
allegations were ever made, and they should be totally disregarded.
Did Mr
Omar Assi bid at 420?
All the
Tattersalls’ witnesses without exception identify the bidder at 420 as Mr Assi.
As I have said, they are all, in my judgment, completely honest witnesses. On
the other hand both Mr Assi himself and Mr Goodbody testify categorically that
Mr Assi’s last bid was at 400. They were both outstandingly fair and convincing
witnesses, for example, in their ready admission that Mr Assi could have gone
beyond his limit of 400 within his own discretion. Neither of them has any
interest whatsoever in this case or any motive to mislead the court. Mr Assi is
a very experienced bidder and Mr Goodbody a very experienced attender at
bloodstock auctions. No one could be in a better position than Mr Assi himself
to know whether or not he bid, and equally Mr Goodbody is a witness of great
weight on the topic, since all his attention was naturally focused on Mr Assi.
Mr Connell
submits that Mr Assi and Mr Goodbody were mistaken and made some detailed
criticisms of their evidence without in any way impugning their honesty. Indeed
both Mr Assi and Mr Goodbody were recognised by Tattersalls as men of the
highest integrity, and one of the Tattersalls’ witnesses went out of his way to
stress the impeccable reputation of the big Arab buyers and owners and their
representatives in the British racing scene.
I did not find
Mr Connell’s criticisms very persuasive nor his reliance on the video, which
zooms away from Mr Assi at the crucial stage after Captain Watt’s first
announcement of 410, thus making it very difficult to draw any firm conclusion,
but, so far as I am able to do so, I agree with Mr Sheridan that Mr Assi seems
to look down at his catalogue in a gesture of disinterest.
Mr Connell
also relies on a pleading point, namely that there was no positive assertion in
the defence until very late in the day that Mr Assi did not bid at 420, but I
do not find this of much significance.
The evidence
is plain that even in the best conducted auctions there are occasionally honest
and excusable mistakes made by the auctioneers which subsequently have to be
cleared up. This is clearly shown by the proper stress laid by Tattersalls on
the fact that Mr Flood did not question the attribution of the final bid to him
during the repetition several times of the 430 figure by Captain Watt. This is
also reflected in Captain Watt’s own evidence about the six or seven occasions
a year that he has to re-auction a horse.
I believe that
just such a mistake occurred here in relation to the 420 bid but that
unfortunately there was no opportunity for it to be clarified because the
bidding passed on almost immediately to 430. Had the bidding lingered at 420,
as it did at 430, I have no doubt that Mr Assi would have corrected the
mistake.
As a result, I
find as a fact that Mr Assi did not bid at 420, though having regard to my view
of the case as a whole, this aspect is not now as important as it first seemed.
I should add
that I am equally satisfied that Captain Watt and all the other Tattersalls’
representatives on or near the rostrum firmly and sincerely believed Mr Assi
did bid 420.
Sequence
and timing following lot 117
I now proceed
to consider the sequence and timing of events immediately after the fall of the
hammer on lot 117. This is an essential preliminary to an assessment of Captain
Watt’s state of mind.
It is common
ground between the parties that from that moment something a little over 30
minutes elapsed before the end of the sale during which the remaining eight
lots were auctioned.
The first
stage, the timing of which is not in dispute, involved the interview between
Captain Watt and Mr Flood. I have already accepted Captain Watt’s evidence that
this lasted about five minutes.
This is
followed (though there is a dispute as to the order of events) by the
conversation with Mr Cecil and the discussion between Captain Watt and Mr Hart.
Captain Watt quite firmly fixes these conversations in the order which I have
just given, and Mr Hart fixes the end of his conversation as coincident with
the auctioning of Blushing Groom, which was lot 123.
Mr Sheridan
submits that the consultation with Mr Hart must have preceded the first
conversation with Mr Cecil and followed immediately upon the interview with Mr
Flood. In support of this argument he places strong reliance on the terms of
the first conversation with Mr Henry Cecil, which, he said, would certainly
have included mention of re-auction if Captain Watt was still considering that
as an open option. I do not find that argument convincing, since I do not think
the purpose of the first Cecil conversation was to rehearse the various options
but rather to alert Mr Cecil at the earliest possible stage to the problem
which had arisen.
Nor was I
convinced by Mr Sheridan’s argument that, since Mr Hart and Mr Batten were
present, the consultation must have occurred contemporaneously with lots 118 or
119, when Mr Batten said he left the rostrum, since Mr Batten could equally
well be wrong on the timing, and he had no particular reason to note it. By
contrast I found both Captain Watt and Mr Hart entirely convincing on this
aspect. Mr Hart’s linkage of the timing with Blushing Groom had the ring of
truth. Moreover, Mr Hart, who was meticulous in the detail of his evidence,
made it quite clear, I am sure rightly, that he was informed by Captain Watt
that Mr Flood had failed to return to the rendezvous after the 10 minutes,
which firmly fixes the Hart conversation after the first Cecil conversation.
This is also strongly in accordance with the probabilities, since Captain
Watt’s need for the Hart consultation arose only after Mr Flood had broken the
rendezvous. Indeed we know that Mr Hart was sent away by Captain Watt on his
first visit to the rostrum.
I therefore
hold as a matter of fact that the Hart consultation took place after the first
Cecil meeting and was only concluded at about 8.25 to 8.30 pm during the
auctioning of lot 123. There was then only 10 minutes or so to go.
Captain
Watt’s thoughts and intentions
This, of
course, is a crucial area of the case. Captain Watt’s evidence is that he did
indeed consider re-auctioning but concluded that that would be foolhardy at
such a late hour for the various reasons of falling audience, stigma etc, which
have been so fully rehearsed by all the witnesses. Therefore, he concentrated
first on trying to pin Mr Flood to his bid and second on finding the
underbidder, who, he said, he quite firmly recognised, though he could not
identify him in the sense that he did not know his name and was not sure which
of the big Arab buyers he represented.
As a result,
it is therefore common ground that re-auction was fairly low on Captain Watt’s
agenda compared with the other two options, but Mr Sheridan puts the case a
great deal higher against Captain Watt and submits that, on a proper
interpretation of the evidence, Captain Watt gave the idea of re-auction at
most very scanty consideration and 90% rejected it in the first few minutes
after the fall of the hammer on lot 117. He also submits that Captain Watt
concentrated first on pinning down Mr Flood and only consecutively on going to
the underbidder, though he says that the latter became a major option quite
early on because of its mention to Mr Cecil.
In support of
these arguments Mr Sheridan of course relies on the terms of the first Cecil
conversation and also on the development of the pleadings, where the defence in
its original form relied only on Tattersalls’ need to satisfy themselves that
the bid would not be met. I have already dealt with the first Cecil
conversation, and I am no more impressed by the pleading point here than I am
by the similar point taken by Mr Connell in relation to Mr Assi’s bid.
As a matter of
probabilities I find it quite inconceivable that an auctioneer of the
acknowledged experience of Captain Watt would not have carefully considered
immediate re-auction as an option, and that he did so is fully borne out by the
evidence, which is not contradicted, that during the Hart consultation they
both focused on the rights of Tattersalls under condition 4(c) both as to form
of sale (ie public or private) and as to timing (ie immediate or deferred
sale). That Captain Watt strongly disfavoured immediate re-auction there can be
no possible doubt, for reasons given very clearly which I shall be considering
shortly. Hence it sank lower on the agenda than the other two options, both of
which I hold were under consideration from very early on.
Once Captain
Watt was reassured by Mr Hart that under condition 4(c) he had a free
discretion both as to mode and as to timing of resale, immediate re-auction
disappeared from the agenda, both because of the lateness of the hour and
because of Captain Watt’s other objections in principle to that course —
objections, I emphasise, which were based solely on the interests of the
vendors as he saw them.
At one stage
during his cross-examination it was, I think rather unfortunately, suggested
that Captain Watt’s real motive in favour of an approach to the underbidder and
against immediate re-auction was his desire to pacify the Arab underbidder, but
this was not persisted in and has no foundation whatsoever.
As to the
search for the underbidder, I am completely satisfied that Captain Watt
recognised Mr Assi as a representative of one of the big Arab buyers and that
his only uncertainty was as to Mr Assi’s name and the precise Arab interest he
represented. This, I think, is fully borne out by the notes on the flyleaf of
his catalogue. There is no question of his being completely uncertain on this
topic, or, in the words of Mr Sheridan, put to him in cross-examination,
embarking on a wild goose chase.
Unfortunately
this was not finally clarified in Captain Watt’s mind until shortly after the
end of the sale, thanks partly to difficulties of liaison between the various
Tattersalls’ representatives, at least two of whom, Mr Batten and Mr Pym, knew
Mr Assi well. However, it is abundantly clear that by 8.30 pm at the latest
Captain Watt at least had correctly identified and located Mr Assi, even though
(for some reason which is not very clear) Mr Stoddart still seems to have had
some residue of uncertainty the next day when he approached Mr Churchward.
The fact that
Mr Assi, as I have held, had not in fact made the bid at 420 does not affect
this aspect since, on any view, he and his principal were well worth pursuing
as bidders of substance who had indisputably bid up to 400 at least.
The issues of
law
There is, as
already noted, substantial agreement between the plaintiffs and Tattersalls
concerning the scope of the duty owed by Tattersalls as auctioneers to their
clients, the plaintiffs. This was formulated by Mr Sheridan on behalf of the
plaintiffs in the following terms:
The duty owed,
by Tattersalls to the plaintiffs is the duty to exercise the ordinary skill and
care of a competent auctioneer in the conduct of the auction, including the
sale of the vendor’s goods, and in the exercise of the discretions and powers
given by the Conditions of Sale.
Further
Tattersalls are under a duty to exercise all reasonable skill and care:
(i) to obtain the best price for the vendor’s
goods;
(ii) to act in the vendor’s best interests.
Mr Connell did
not dissent from this in principle, but his formulation would lay rather more
stress upon the importance of the conditions of sale, particularly the
discretion given to the auctioneers under condition 4(c) as to both the mode
and timing of resale.
I accept Mr
Sheridan’s formulation of the duty but at the same time will in applying it to
this case pay full proper regard to the discretionary powers of Tattersalls
under condition 4(c)
The two sides,
however, are completely at odds on the very important question of the standard
by which this duty is to be judged.
Mr Connell, on
behalf of Tattersalls, submits that, since what is in issue here is a matter of
professional judgment by professional men, in order to establish negligence it
is not sufficient for the plaintiff to show that there is a body of competent
and professional opinion that considers the decision wrong, if there is also a
body of professional opinion equally competent which supports the decision as
reasonable in the circumstances. In this professional field, he submits, the
law recognises that there is ample room for genuine differences of opinion and
practice, and the court’s preference of one body of opinion to another is no
basis for a finding of negligence.
In support of
this argument he relied mainly on the unanimous decision of the House of Lords
in the case of Maynard v West Midlands Regional Health Authority
[1984] 1 WLR 632, in which the principles laid down by McNair J in his now
classic summing-up to the jury in Bolam v Friern Hospital Management
Committee [1957] 1 WLR 582 were approved on the highest authority.
Maynard’s case concerned medical negligence in the field of diagnosis and
treatment. At first instance the trial judge held that the defendant’s
consultant physician and surgeon had been negligent, preferring the evidence of
one group of medical specialists who condemned the defendant’s actions against
that of another group who approved it.
The House of
Lords’ decision is contained in the speech of Lord Scarman, with whom Lord
Fraser of Tullybelton, Lord Elwyn-Jones, Lord Roskill and Lord Templeman
agreed. In his speech Lord Scarman first cited a passage from the speech of
Lord Edmund-Davies in another medical negligence case, Whitehouse v Jordan
[1981] 1 WLR 246, where Lord Edmund-Davies said at p 258:
The test is
the standard of the ordinary skilled man exercising or professing to have that
special skill. If a surgeon fails to measure up to that standard in any
respect, he has been negligent.
Lord Scarman
then proceeds:
The present
case may be classified as one of clinical judgment. Two distinguished
consultants, a physician and a surgeon experienced in the treatment of chest
diseases, formed a judgment as to what was, in their opinion, in the best
interests of their patient.
Lord Scarman
then discusses the medical details of the diagnosis and proceeds:
A case which
is based on an allegation that a fully-considered decision of two consultants
in the field of their special skill was negligent clearly presents certain
difficulties of proof. It is not enough to show that there is a body of
competent professional opinion which considers that there was a wrong decision
if there also exists a body of professional opinion, equally competent, which
supports the decision as reasonable in the circumstances. It is not enough to
show that subsequent events show that the operation need never have been
performed, if at the time the decision to operate was taken it was reasonable
in the sense that a responsible body of medical opinion would have accepted it
as proper. I do not think the words of Lord President Clyde in Hunter v Hanley
1955 SLT 213, 217 can be bettered:
‘In the realm
of diagnosis and treatment there is ample scope for genuine difference of
opinion and one man clearly is not negligent merely because his conclusion
differs from that of other professional men. . . . The true test for
establishing negligence in diagnosis or treatment on the part of a doctor is
whether he has been proved to be guilty of such failure as no doctor of
ordinary skill would be guilty of if acting with ordinary care.’
I would only
add that a doctor who professes to exercise a special skill must exercise the
ordinary skill of his speciality. Differences of opinion and practice exist and
will always exist, in the medical as in other professions. There is seldom any
one answer exclusive of all others to problems of professional judgment. The
court may prefer one body of opinion to the other, but this is no basis for a
conclusion of negligence.
Then a little
later on at p 639:
I have to say
that a judge’s ‘preference’ for one body of distinguished professional opinion
to another also professionally distinguished is not sufficient to establish
negligence in a practitioner whose actions have received the seal of approval
of those whose opinions, truthfully expressed, honestly held, were not
preferred. If this was the real reason for the judge’s finding, he erred in law
even though elsewhere in his judgment he stated the law correctly. For in the
realm of diagnosis and treatment negligence is not established by preferring
one respectable body of professional opinion to another. Failure to exercise
the ordinary skill of a doctor (in the appropriate speciality, if he be a
specialist) is necessary.
Mr Connell
submitted that exactly the same principles apply here mutatis mutandis
to the exercise of professional judgment by Captain Watt. He further submits
that there is an ample body of expert evidence in this case, drawn not only
from the experts called by Tattersalls but also from evidence given by some of
those called by the plaintiffs, to show that there is indeed a respectable body
of auctioneering opinion which supports and approves of Captain Watt’s actions
and decisions.
Mr Sheridan
submits that the doctrine laid down in Maynard’s case is inapplicable to
the present case. Unlike Maynard, he says, this is not a highly technical
case, which could be the subject-matter of a theoretical approach by
distinguished experts, applying canons of established learning, supported by
textbook citations and the like. It involves, he submits, an entirely different
and much lower standard of expertise which cannot be found in any handbook or
guide. Consequently he submits that this is a case where I can and should
exercise my own judgment in deciding which expert evidence I prefer and should
then decide the case as a result of that preference.
Mr Sheridan
also focuses close attention on the phrase, repeated in the judgment of Lord
Scarman, ‘body of professional opinion’ (my italics) and says that none
of the experts her have established a body of opinion in the sense of a school
of thought adhered to by an identifiable group of members of the auctioneering
profession.
With the
utmost respect for Mr Sheridan, I have no hesitation whatsoever in rejecting
his submission on this important topic on both counts. In my judgment, the
essential criterion for the application of the Maynard doctrine is that
the attack is on an exercise of professional judgment, and it matters nothing
whether that exercise involves some arcane or abstruse question requiring deep
study and learning, or some apparently much more mundane problem of
professional judgment. Take by way of comparison the case on the one hand of a
barrister advising on a difficult point of revenue law, involving detailed
considerations of statute and case law, and on the other hand another barrister
engaged in cross-examination where no textbook will help very much but where
professional skill and judgment (though of a different character) are every bit
as important.
In my judgment
there can be no question but that the decisions with which Captain Watt was
confronted that evening, which are at the centre of the controversy in this
case, did indeed involve the exercise of professional skill and judgment.
Indeed Mr Sheridan’s formulation of the scope of the duty, which I have already
quoted, directly invokes the test of the professional skill and care of a
competent auctioneer.
In deciding
whether Tattersalls met that standard or fell below it, they are just as much
entitled as a doctor or any other professional man to be judged in accordance
with the principles laid down in Maynard’s case.
As to Mr
Sheridan’s argument based on the phrase ‘body of medical opinion’, in my
judgment the present case differs from none of the others, including Maynard’s,
as to the mode and character of evidence in a situation of this kind. Expert
professional opinion can only be proved by the evidence of individual experts
in the same field, giving their testimony as individuals. We do not in our
courts take evidence by committee.
Provided the
evidence of one or more of the experts points to an accepted standard, that is
sufficient, and it is not necessary to go in for a head-counting exercise. The
use of the phrase ‘body of opinion’ is, in my judgment, to guard against
reliance by a defendant in a professional negligence case on some idiosyncratic
quirk of view manifestly outside the mainstream of professional opinion. A very
helpful illustration of this aspect is given by McNair J in the Bolam
case at p 587 where he says in relation to surgical practice:
At the same
time this does not mean that a medical man can obstinately and pig-headedly
carry on with some old technique if it has been proved to be contrary to what
is really substantially the whole of informed medical opinion. Otherwise you
might get men today saying, ‘I do not believe in anaesthetics. I do not believe
in antiseptics. I am going to continue to do my surgery in the way it was done
in the eighteenth century.’ That clearly
would be wrong.
In my judgment
what is needed to supply the necessary proof in a case of this kind is evidence
from individual witnesses of obvious
all the experts in the present case qualify in this respect to a greater or
lesser degree apart, perhaps, from Dr Pessin, and that only because his field
of expertise is in the main not in this country but in the United States, where
auctioneering practices are different in many significant respects. I shall
thus apply the Maynard test in this case.
Mr Connell
also invited me, at any rate to some extent, to treat Captain Watt’s
predicament as equivalent to an emergency, citing the case of BSM v Sims
[1971] 1 All ER 317, where a driving instructor was acquitted of negligence
when he stopped a car across the middle of a main road after a learner driver
had driven dangerously out of a side turn. Mr Connell accepted that there was a
vast difference on the facts but said that the principle should none the less
apply in some degree. Mr Sheridan (I thought with considerable force) submitted
that this was in no sense an emergency, and in any event auctioneers can and
should be trained to meet just such a crisis.
In my
judgment, while, of course, time (or lack of it) that Tuesday evening is a very
relevant consideration in the proper approach to the facts and to the decisions
made by Captain Watt, this is not a case where I should in any way relax the
legal duty in line with the BSM case, and I shall not do so.
Was there
a breach of duty by Tattersalls?
I now proceed
to consider whether Tattersalls were in breach of their duty, applying the Maynard
test and therefore concentrating primarily on the expert evidence.
All six
experts were thoroughly honest and competent people, and all experienced in one
way or another in the field of professional auctioneering, though from
different standpoints which are not without importance.
Mr Irwin is
himself a bloodstock auctioneer and therefore has direct knowledge and
experience precisely similar to that of Captain Watt himself. He was a very
good and scrupulously fair witness.
Col Hastings
and Col Warden, though not themselves auctioneers, also have vast and relevant
experience of the auctioneering world, the former as chairman of the British
Bloodstock Agency and the latter as the director of the Curragh Bloodstock
Agency. Both were also very good and scrupulously fair witnesses, and it is
with no disrespect to Col Warden when I say that I found Col Hastings quite
outstanding in the wealth of his knowledge and experience, the conviction which
he carried in giving his evidence and the strict impartiality of his approach
to this case.
Mr Whitfield
and Mr Royle both have very great experience of the auction world, the former
as a director of Christie’s and the latter as a director of Hollingsworth’s.
They are both therefore thoroughly competent to speak about auctioneering
generally, though the fact that their experience is limited to the fine art
world rather than the bloodstock world does to some extent affect the weight of
their evidence compared with experts in the bloodstock field. This distinction
is not without significance, since, for example, it is impossible for the
auctioneer at a fine art sale to engage in a discussion about a disputed or
denied bid during the currency of the same sale, since he is tied to his
rostrum. Equally, it is much easier to re-auction an inanimate object like a
picture or a sculpture at a subsequent sale, whereas for a yearling foal time
is of the essence, since the yearling is being bought to be raced as a
two-year-old the following season.
However, I
thought that Mr Sheridan overstated his case when he suggested that these
differences virtually disqualified these two experts save to a minor degree,
and in my judgment they are qualified as experts in this case, though in
assessing the weight they carry the factor I have just mentioned must be taken
into account. Without any disrespect to Mr Royle, Mr Whitfield, I think,
carried the greater authority, since Mr Royle’s two main points were somewhat marginal,
Tattersalls never having relied on difficulties of construction of condition
4(c) and the worry about authenticity not really applying to yearling foals as
it might to works of art.
Dr Pessin was
a thoroughly honest witness and has great experience of bloodstock auctions.
However, his experience was substantially confined to the United States, and
the last time he visited a sale at Tattersalls was 1970. Bloodstock
auctioneering in the United States is different from here in a number of
material respects. In particular, spotters are situated round the ring and will
take bids not only from their area of the ring but also outside it and relay
them to the auctioneer. Moreover, vendors are allowed to bid all the way
through and therefore frequently regret the bid too far which lands them back
with their own animal. Consequently disputes are far more common there than
here, and immediate re-auction much more a matter of everyday experience, as
the bulk of expert evidence showed. It is for that reason, and that reason
alone, that I do not attach great weight in the present case to Dr Pessin’s
evidence.
How does the
expert evidence stand on the vital issue whether or not there is a respectable
body of professional opinion which supports the course Captain Watt took?
The three
directly qualified experts all to a greater or lesser degree support what
Captain Watt did or at least do not condemn it. Col Hastings, while preferring
a re-auction the same day if there was time, unequivocally expressed the view
in support of Captain Watt that in the actual circumstances prevailing there
was not time to re-auction advantageously on that Tuesday evening during the
short time remaining. Mr Irwin accepted that Captain Watt’s actions were
reasonable, while firmly and very fairly adhering to his own point of view that
an immediate re-auction was preferable. Col Warden also accepted that Captain
Watt’s conduct was reasonable, while firmly adhering to his point of view that
an announcement of a possible resale should have been made at an early stage,
though he made it perfectly clear that in his view the earliest possible
sensible moment for such a re-auction to be fixed might be the following
morning rather than the same evening, thus departing to some extent at least
from the plaintiffs’ case.
Both fine arts
auctioneers unequivocally support Captain Watt’s position, and this is further
material evidence to be taken into account while not losing sight of the
reservation as to these two experts which I have already mentioned. Only Dr
Pessin unequivocally dissented, but I have already indicated the strength which
I attach to his evidence, though it is fair to say that it is also supported by
Mr Henry Cecil and Mr Cherry-Downes, who are also experts in this field, but,
of course, not disinterested in this particular case.
Mr Sheridan
submitted that all Tattersalls’ experts’ evidence is flawed by the
consideration that their reports were based on assumed facts supplied to them
by Tattersalls themselves and that they were not pronouncing on an agreed set
of facts. I think this criticism has some degree of force in relation to their
written reports but none whatsoever in relation to their oral evidence, which
was given in the case of each expert at a time when he was fully aware of the rival
contentions of fact. There is therefore nothing of any real substance in this
criticism. Mr Sheridan also submitted that the concessions made by Mr Irwin and
Col Warden were of very limited value in view of their parallel adherence to
their own preferred practice. This criticism I also think is of little
substance, since that adherence shows no more than that there are two
respectable rival schools of thought. Remember the words of Lord Scarman, which
I read a moment ago:
Differences
of opinion and practice exist and will always exist in the medical as in other
professions. There is seldom any one answer exclusive of all others to problems
of professional judgment.
In my judgment
the relevant expert evidence taken as a whole demonstrates beyond peradventure
that Captain Watt’s actions and decisions were fully and completely in line
with a respectable and responsible body of professional opinion in the
auctioneering world generally and also specifically in the bloodstock
auctioneering world.
I therefore hold
that the plaintiffs have failed to establish negligence or breach of duty on
the Maynard test and accordingly the plaintiffs’ claim against
Tattersalls fails.
My above
conclusion based on the Maynard test is sufficient to dispose of this
part of the case. However, I think it to be right that I should very briefly
make it clear that if it were open to me to choose between the two rival views
(which it is not), then I have not been persuaded that, in the circumstances
which prevailed late that evening on the Tuesday, it would have been reasonably
seen by a capable auctioneer to be clearly preferable in the vendor’s interests
to re-auction that evening.
To have done
so (as Mr Irwin would have done) or at least to have made a preliminary
announcement of a possible resale either that evening or the next morning (as
Col Warden favoured) would certainly have been perfectly respectable courses of
action.
But at the end
of the day, having carefully scrutinised all the evidence, I find Col Hastings’
view the compelling one, namely that as a matter of principle it is better to
re-auction the same day but only provided there is time left to do so
advantageously, and that in the
Let me explain
why without going into much detail. In my judgment, the earliest that Captain
Watt could reasonably have contemplated making a preliminary announcement of a
possible re-auction, let alone actually announcing firmly that it would take
place that very evening, was after Mr Flood had failed to reappear and after
after Captain Watt had his position confirmed by Mr Hart. This was at 8.25 to
8.30 pm when there were only two lots to go, which, as we know, took only a
further 10 minutes at the most.
Mr Sheridan
addressed strong arguments that, however late in the day, there is still an
overwhelming case for re-auction there and then because of the very special
nature of that first select day in contrast to all the other days, with the
abundance both of top-quality horses and of top-quality buyers attracted by
skilful publicity to attend on that occasion. This, of course, is a very strong
point in principle, all other things being equal.
At the same
time, it is perfectly clear that such undoubted special advantages must tend to
evaporate, perhaps even to the vanishing point, at the end of a very long day,
which had started six and a half hours before. Moreover, here there was a very
special circumstance which was likely to accelerate that process, namely the
fact that the biggest lot of the day, 117, with all its attendant excitement,
had immediately followed 116 and was completed before Captain Watt first knew
of the problem. After 117 an anti-climax was almost inevitable. Indeed, the
evidence is abundant that at this stage there had been a large exodus, no doubt
in large measure consisting of spectators, but also, I am quite sure,
consisting of some buyers also, particularly as it was after 8 pm on an
occasion of much social as well as commercial significance.
Quite apart
from these considerations, I am very strongly influenced by the stigma aspect,
which carried so much weight with Captain Watt and is also so strongly
supported by Col Hastings. I found Col Hastings’ reasoning on this point
convincing and was unpersuaded by Mr Sheridan’s argument that Tattersalls, with
all their great skill and reputation as auctioneers, would necessarily have
been capable of allaying this anxiety by a skilful and punctual announcement,
though I am sure they would have done their best if the need had arisen.
The very
earliest the horse could have been actually re-auctioned was after the
conclusion of the Hart consultation — ie after lot 123 and immediately before
the last two, lots 125 and 126, 124 having been withdrawn.
But, in fact,
I think it would have been quite reasonable for Tattersalls, if they had
decided to re-auction, to have balanced the interest of the vendors of those
last two lots against that of the vendor of 116 and decided not to offend the
former by interposing the Riverman colt before the end. Consequently the
likelihood is that if there had been a re-auction it would have been at the
very end, after lot 126 and after 8.40 pm and thus at the worst possible time
on that particular day.
In my
judgment, applying Col Hastings’ very careful reasoning, the better view on
balance is that a re-auction at that juncture was more likely than not to be
disadvantageous to the vendor.
As a result,
although there is, I think, force in Mr Sheridan’s criticism of Captain Watt’s
dogged determination to stick to Mr Flood, despite his conclusion that Mr Flood
was mendacious, and without taking into account Tattersalls’ residual rights
against Mr Flood under condition 4(c), this does not really matter once
immediate re-auction is reasonably rejected as an unacceptable option. It is
equally immaterial for the same reason whether Captain Watt’s determination to
offer to treat with the underbidder was wise, though I do not think that Mr
Sheridan’s criticism of that course was very convincing, since Captain Watt and
his colleagues clearly believed Mr Assi was the underbidder and there was
always a chance (even though probably not a strong one) that he would buy at or
near the underbid price and it was obviously by far the most advantageous
result for the vendor if such a price, or even something approaching it, could
be achieved in this way.
Damages
I have been
asked by both counsel as a matter of precaution, in case this case goes
further, to make a finding as to what, if any, sum of damages would have been
appropriate if I had found in the plaintiffs’ favour against Tattersalls,
which, of course, I have not. It is common ground that the amount of damages,
if any, would be the equivalent of the value, if any, placed by the court on
the loss which would have been suffered by the plaintiffs through losing their
chance of re-auction on the Tuesday evening.
Mr Sheridan
relies on the following points:
(1) Col Hastings’ evidence that on a day like the
select day prices tend to be inflated.
(2) The difference between Mr Goodbody’s
valuation and Mr Assi’s limit (ie about 100%) shows the value of the uplift to
be expected at an auction of this kind.
(3) The number of people who inspected the colt
shows that there was considerable demand.
(4) The indication is that there were other
bidders up to at least 280, based on Mr Assi’s evidence.
(5) As a result the price to be expected if there
was a re-auction that evening was somewhere between 300 and 400.
Mr Connell, on
the other hand, relies upon all the points which I have taken into
consideration in relation to the advantages or otherwise of re-auctioning that evening.
He also points out that the expert evidence is very strong that by and large
re-auction results in a substantial drop compared with the original bid price.
He submits that, for reasons I have already accepted, Tattersalls would have
been entitled to put the colt last (see McGregor on Damages, para 279).
He does not accept that there were other bidders beyond the early 200s, and he
relies on the video. He also points out that the Thursday sale was well
advertised and that, as agreed statistics show, 55% of the bidders on the
Tuesday were also present on the Thursday, many of them substantial, and at
least one of them, namely the eventual successful bidder for the colt, Sheikh
Hamdam, another of the sons of the ruler of Dubai, of the greatest substance.
Mr Connell
also takes the point very strongly, based on Col Hastings’ evidence, that lots
125 and 126 in the result fetched unexpectedly low prices, round about 50% of
Col Hastings’ expectations, thus confirming that the ranks of buyers had
thinned out substantially by the very end of the day.
I accept Mr
Assi’s evidence that he only entered the bidding at 280 at the earliest, since
I do not find the video helped very much either way on this point.
Consequently, I accept that there was at least one other bidder in the 200
range. I also accept that there may have been others interested in the 300s who
were not bidding because there was a ding-dong battle in progress between two
existing bidders, though that is in no way established and is indeed to some extent
contradicted by Mr Hillman’s evidence that he saw no other potential bidder.
Moreover, we do not know what would have been the limits of such other
potential bidders, nor even of the third bidder who was in during the 200
range.
Mr Assi would
certainly not have bid again that evening. Nor would Mr Flood have been allowed
to, even if he had tried, which seems extremely unlikely. Leaving those two
aside, there would therefore have to be two other bidders over 200 in order to
carry the price above that level. They would also have to be bidders with
limits above 200 who happened to have stayed on beyond lot 117 and then right
up to the end, having heard the assumed announcement. They would also have to
be unaffected by the stigma.
Such persons
might no doubt have existed, but in my judgment, on a matter where the burden
of proof lies on the plaintiffs, it is far too speculative for the court to
conclude as a matter of probability that such persons would both have been
present that late in the evening and have carried the bidding up beyond 200,
particularly having regard to the actual experience of lots 125 and 126, which
I regard as a most important piece of evidence in this context.
Equally, on
the other side of the coin, bearing in mind Mr Michael Watt’s evidence, I
cannot see why, by and large, such persons should not have been equally likely
to be present when the colt was re-auctioned on the Thursday. This was a
well-announced sale attended by more than half of the bidders of the Tuesday,
including the one outstandingly powerful bidder who was eventually successful
and not competed against after his 200 bid.
Taking the
matter as a whole, I am not satisfied that, even if the plaintiffs had
succeeded on liability, they would have proved that the chance they lost was
the realisation that same evening of a price in excess of 200 and therefore I
would have held that no damage had been established against Tattersalls.
The
third-party claim
Despite my
above findings, this is still alive to the extent that Tattersalls claim an
indemnity against Mr Flood for the shortfall between their total costs and
their taxed costs.
The
third-party notice is based on two separate grounds, namely fraud and breach of
contract.
So far as the
claim in fraud is concerned, it is common ground between Mr Connell and Mr
Martin that, in order to establish fraud, Mr Connell must prove on a high
standard of probability that at the time Mr Flood bid, he did so knowingly and
without the intention at the time he made his bid to honour it. His subsequent
conduct is only relevant in so far as it throws light on his state of mind at
the time. I have already held that he did indeed knowingly bid. In my judgment
there can be no doubt that he also did so without the intention at the time of
honouring that bid. I can see no other reasonable explanation for his refusal
afterwards to give his name and address, for his non-attendance after 10
minutes at the rendezvous, for his absconding, for his subsequent lying low
when he knew perfectly well of the hue and cry and for his lies and evasions
both to the police and in the witness box.
Consequently I
hold that his bid was fraudulent. There is no need for Tattersalls to prove his
motive, and I shall resist the temptation to speculate what might have been.
The second
basis of the third-party claim is breach of contract. Mr Martin originally
submitted that there was no breach of contract, since there was no contractual
relationship between Mr Flood and Tattersalls. Later he withdrew from that
extreme position when confronted with Mr Connell’s citation of Chelmsford
Auctions Ltd v Poole [1973] QB 542, where the Court of Appeal held
that in auction law there are three contracts, namely that between vendor and
purchaser, that between vendor and auctioneer, and that between auctioneer and
purchaser. But he still, though somewhat faintly, submitted that there could be
only one cause of action here in all, and that consequently there could be no
right for both the purchaser and the auctioneer to sue separately.
There is
nothing in this last point, and I hold that there was clearly a contract
between Mr Flood and Tattersalls established by the conditions of sale, in
particular condition 4(c), and that Mr Flood broke it both by refusing to give
his name and address and by refusing to pay up. Consequently Tattersalls have
established breach of contract as well as fraud by Mr Flood and are, in my
judgment, entitled to recover from Mr Flood the costs shortfall referred to
above. For similar reasons Mr Flood’s contribution notice is dismissed.
Before leaving
this case I should like to make it clear that none of my findings reflect any
discredit on Mr Cecil or his colleagues in the Cliff Stud venture. They were
caught up in a critical situation the moment the hammer fell at 430, through no
fault of theirs, and through no fault of Tattersalls either, but solely through
the dishonest machinations of Mr Flood. Thereafter it was their misfortune, not
their fault, that Tattersalls were only able partially to salvage the situation
by the proper application of professional skill, such as I have held
Tattersalls exercised. The plaintiffs are, of course, still left with their
full remedy against Mr Flood, though, of course, this is likely to be
substantially less valuable than a remedy against Tattersalls would have been.
In the result,
there will be judgment for the plaintiffs against Mr Flood for the sterling
equivalent of 230,000 guineas, ie £241,500, together with interest on the
computation of which I shall hear counsel.
There will be judgment
for Tattersalls against the plaintiffs on the plaintiffs’ claim against
Tattersalls:
There will be
judgment for Tattersalls against Mr Flood in the third-party proceedings for an
indemnity to cover the shortfall of Tattersalls’ costs.
Mr Flood’s contribution
claim against Tattersalls is dismissed.
EDITOR’s NOTE:
Hirst J’s summary of the factual evidence, which appears on pp 21 to 27 of this
volume, was not reproduced when the case was reported in ‘Estates Gazette’,
owing to lack of space. The judgment is reported in full here.
