Martin v Posener & Anor, Court of Appeal - Queen's Bench Division, September 13, 2017, [2017] EWHC 2320 (QB)

Resolution Date:September 13, 2017
Issuing Organization:Queen's Bench Division
Actores:Martin v Posener & Anor
 
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Case No: HQ16X01511

Neutral Citation Number: [2017] EWHC 2320 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 13 September 2017

Before :

HIS HONOUR JUDGE SIMPKISS

(Sitting as a Deputy Judge of the High Court)

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Between :

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Peter Oliver for the Claimant

Clifford Darton and George Woodhead for the Defendant

Hearing dates: 3, 4 and 5 July 2017

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JudgmentHis Honour Judge Simpkiss :

Introduction

  1. The Claimant and the Defendants are distant second cousins, the Defendants are brothers. The Claimant and the Defendants did not know each other before the events leading up to the contract, although they were vaguely aware of each other's existence as family members. The Claimant brings this claim to recover sums of money that he says are due to him under a written contract entered into between them on 22nd November 2014 (``the contract''). Under the contract the Claimant agreed to provide finance for Lee Chudson (``Mr. Chudson'') to carry out research for the purpose of supporting claims for compensation in Germany in relation to assets seized by the Nazi regime. In consideration for this finance, the Defendants agreed that they would reimburse the Claimant for the expenses and fees paid to Mr. Chudson and also to 30% of the net sums awarded in compensation after deducting certain expenses. It is common ground that the Defendants are refusing to permit any sums to be paid out to the Claimant, either in respect of expenses and fees that he says that he paid or incurred to Mr. Chudson or any share in the award that was ultimately obtained. The contract is governed by the Law of the Commonwealth of Massachusetts and the court directed that a report should be obtained from a jointly instructed expert, a retired judge Hon Allan van Gestel (``Judge van Gestel''), whose last public position was to preside over the Superior Court's Business Litigation Session.

  2. The Claimant is a senior partner in the firm of Duane Morris LLP in Boston Massachusetts. He has acted in person throughout, instructing his counsel, Mr. Oliver, under the direct access scheme. The Defendants were represented by Humphries Kerstetter LLP until 24 May 2017, then by Mayo Wynne Baxter LLP until they came off the record on 13th June 2017 and in person since then and at the trial. They instructed Mr. Darton and Mr. Woodhead under the direct access scheme for the trial. The Defence was drafted by different counsel at the time that Humphries Kerstetter were on the record.

  3. It is easier to understand the issues in the case with knowledge of the background facts which I will now turn to. Although the amount at stake in this case is relatively low for a High Court trial, a voluminous amount of documentation has been produced, much of it not relevant and not referred to. The witness statements are also very long and contain matters which are either not relevant or are in fact inadmissible as evidence in relation to the issues that arise, for example, subjective views about what the parties intended the contract to mean. This case therefore appears to be much more complex than it is or ought to be.

  4. In relation to the instructions of Judge van Gestel, there was a dispute between Mr. Darton and Mr. Oliver. Mr. Darton submitted that the only instructions came from the Claimant and that the questions posed were not the Defendants'. I was informed by Mr. Oliver that the reason for this was that the Claimant produced draft instructions and submitted them to the Defendants for their agreement or for them to suggest amendments. They did not respond and at a hearing before Mr. Justice Ouseley in the applications court in June 2017 there was some discussion and Mr. Darton argued, rightly and successfully, that the instructions should not contain references to authorities. These were removed. Mr. Oliver expected that there would then be some discussion outside the court to agree instructions, but Mr. Darton insisted that they go to the expert in the form drafted without the references to authorities. The Defendants therefore had every opportunity to argue for their own instructions. If the questions are not ones that they wanted to then, that is a matter which they could have rectified and chose not to. Any deficiencies in the instructions cannot therefore be blamed on the Claimant.

    The background facts

  5. The parties are descended from German-Jewish business owners whose properties, or the proceeds of those properties and businesses, were confiscated by the Nazi regime during the 1930's. In the 1950's schemes were set up to enable those whose property had been confiscated, or their living heirs, to make claims for compensation. At this time, the compensation schemes were operated in West Germany. After unification in 1989, similar schemes were set up for those claiming in East Germany.

  6. In 2014 these compensation claims were administered by a federal German agency known as the Bundesamt fur zentrale Dienste und Offene Vermogensfragen (``BADV''). Because so many records of ownership of properties and assets were destroyed in or following the Second World War applicants were required to prove that they were heirs by circumstantial evidence. The BADV scheme was closed to new applicants on 31st December 1992.

  7. Claims filed at the BADV are private and confidential and third parties can only obtain access to them by means of a ``Vollmacht'' or power of attorney granted by the claimant or his heirs.

  8. The BADV pays compensation for 3 types of claim: loss of real estate, loss of business assets and confiscation of bank accounts into which proceeds from forced sale of these assets had been deposited.

  9. Because so many potential claimants died during the Holocaust, Germany transferred ownership of all unclaimed heirless property to the Conference on Material Claims against Germany, also known as the Jewish Claims Conference (``The JCC''). The JCC listed unclaimed properties and names of original owners. If a claimant proved to be an heir, the JCC would obtain compensation from the BADV for the property. JCC operated 3 separate funds:

    i) the Good Will Fund, which was expected to pay out some 80% on any admitted claim. Time for making applications under this fund had expired by November 2014;

    ii) the Late Applicant's Fund for which final claims had to be made by 31st December 2014. This would pay out 50% of the claim;

    iii) the Third Claim Programme which gave no guarantee of the percentage payment to be made.

  10. It is common ground that in order to make a claim it was necessary retain a German lawyer.

  11. Heinrich Posener was the Defendants' grandfather, and Siegbert Posener was their father. Heinrich was in partnership with his brother-in-law Moritz Falk (``the Partnership'') and the Partnership owned and operated a number of department stores. Some of the real estate on which the stores were run was in separate ownership from the partners. Heinrich owned one of these properties in particular was a department store in Kesseldorfstrasse Dresden-Lobtau, Germany (``the Lobtau Store'').

  12. The Partnership formed a purchasing consortium with stores owned by other members of the extended family. This was known as Wollwarenhaus Saxonia Falk & Posener (``WSF&P'') with headquarters in Dresden and servicing 18 stores. In 1936 Heinrich died, leading to the liquidation of the stores. The proceeds of the liquidation were deposited at East German banks and were subsequently confiscated by the Nazis.

  13. In 1957 Moritz Falk's 2 daughters, Edith Ostreicher and Margot Weiss (the Falk daughters), who lived in Rio de Janeiro, made claims for both the Falk and Posener heirs in the West German compensation scheme. It was said that this claim was erroneous, because it was based on an assertion that Moritz owned all the business assets of the Partnership, which is said to be untrue. The effect of this claim was to create a ``cloud'' (The Falk cloud'') on the title of Heinrich's heirs to claim compensation.

  14. In 1990 Siegbert Posener made claims in the East German compensation scheme and after his death his sons, the Defendants, made claims for the real estate owned by Heinrich, using a German lawyer called Dirk Plagemann. Mr. Plagemann obtained compensation for the real estate of the Dresden Store but not for the business assets.

  15. The Claimant is the grandson of Josef Lenczynski and his wife Margarethe. Margarethe was Heinrich's sister. Unsurprisingly, he took a great interest in his family's experience in Germany before the war, but equally unsurprisingly, his parents would not talk about it.

  16. The Claimant became aware of the JCC in about 2004 and the list on its website of properties which had been owned by his grandfather, Joseph. He engaged Mr. Chudson to assist him in making a claim. Mr. Chudson is also distantly related to the parties. He has been involved in researching Holocaust archives since the 1950's and as carried out research in several countries, including Germany. From 2002 he started to work closely with Dr. Arndt Surner, a German lawyer in the firm of Hirsch Thiem & Collegen, dealing with claims to the BADV, the JCC and appeals from their decisions to the German courts.

  17. Mr. Chudson became aware that claims had been filed by Siegbert Posener in relation to Heinrich's assets. He says he found this out in 1998. These were under the West German programme and later under the East German programme.

  18. Mr. Chudson and Dr. Surner were able to recover compensation for the Claimant in respect of an East Berlin property, and another department store owned by his paternal grandfather, Joseph Lenzcynski. Mr. Chudson says that Joseph Lenczynski was Heinrich's executor and also one of the liquidator of the department stores.

  19. In 2014, in the course of his...

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