Salamony v Balfour Beatty Construction Ltd [2004] EWHC 41 (Ch)

Case No CH/2003/PTA/0519[2004] EWHC 41 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 20 th January 2004
Before
THE HONOURABLE MR JUSTICE LIGHTMAN
Between
DR MOSHEN SALAMONYClaimant/BALFOUR BEATTY CONSTRUCTION LI MITEDDefendant/Respondent
Mr Simon Edwards (instructed by Judge & Priestley, Justin House, 6 West Street, Bromley, Kent BR1 1JN) for AppellantMs Joanne Cash (instructed by Morton Pugh Welch, Royex House, Aldermanbury Square, London EC2V 7HR) for RespondentHearing Hearing dates : 19 th January 2004
Judgment

INTRODUCTION

[1]This is an appeal with the permission of Rimer J by the claimant Mr Mohsen Salamony (“the Claimant”) against the judgment (“the Judgment”) of His Honour Judge Green given on the 27th June 2003(1) refusing the Claimant an adjournment of the trial of the action and consequently striking out the action; and(2) ordering the Claimant to pay the costs of the defendant Balfour Beatty Construction International Ltd (“the Defendant”) on an indemnity basis.

FACTS

[2]British Investment Management & Consulting House Limited (“BIM”) was incorporated in Ireland on the 13th April 1995. The Claimant claims that he and Dr Mohammed Hassouna have at all times been the two directors and shareholders of BIM. This is not accepted by the Defendant. The Irish Companies Registry does not disclose these facts. BIM’s own register does, but this register is open to question.[3]On the 22nd August 1995, according to the Claimant, BIM through the Claimant entered into an oral contract with two representatives of the Defendant, Mr McDonald and Mr Thompson. The critical facts were pleaded in paragraphs 6-16 of the Particulars of Claim: “6. At this meeting, the claimant on his own behalf and on behalf of British Management, and the Defendant entered into an oral agreement (‘the Consultancy Agreement’). It was an express oral term of the Consultancy Agreement that the Claimant through British Management was engaged to carry out the following consultancy services for and on behalf of the Defendant:(1) to identify Egyptian financial firms and banks which would be interested in participating in the Venture;(2) to prepare a business study of the Venture; and(3) to meet and negotiate with, and persuade, the possible joint venturers to enter into the Venture. 7. Further, at the said meeting, it was also orally agreed that British Management would be paid the sum of $US250,000 as its expenses and fees with respect to the activities referred to in Paragraph 6, above. 8. Further, it was an express oral term of the Consultancy Agreement that the said sum was due to British management from the Defendant irrespective of whether or not the Venture was satisfactorily concluded. 9. Further, in pursuance of the Consultancy Agreement, over September and October 1995, the Claimant and or British Management on behalf of the Defendant undertook the following work: (1) The Claimant prepared the business study of the Venture and engaged the services of two Egyptian Accountants, Dr Mohammed Hassouna and Dr Sharif Elbardoy who prepared Valuations and feasibility studies. The Claimant was directly liable to these firms for their fees and paid them $60,000 US Dollars and 15,000 in Egyptian currency; (2) The Claimant attended a series of meetings with several large Egyptian financial firms and banks; (3) The Claimant met with and discussed the Venture with Egyptian regulatory authorities. 10. Further, the Claimant then selected four possible Egyptian partners for the Venture and arranged a meeting between each of them and the directors of the Defendant in Cairo to take place on 2 November 1995. 11. At the said meeting on 2 November 1995, all the Egyptian Financial Institutions attended and it was proposed that the Claimant together with Mr Hassouna should prepare a business plan with a joint company and in pursuance of the Consultancy Agreement, the Claimant prepared such a plan whereby there would be a new company formed, Balfour Beatty International (Egypt). 12. On 29 February 1996, the Defendant agreed to take up 70% of the shareholding in the company with the remaining shareholding being taken up by one of the financial Institutions. Dr Hassouna arranged for the formation of the Company and also for licenses and approved from the Egyptian Administration of Trade for the company to be established and to obtain the licensing required. He also obtained details from the Financial Institution as to their proposed capital participating as was required by Egyptian law. All of the Institutions remained eager to participate in the joint venture. 13. On or around 1 December 1996, the Egyptian firms and banks agreed to enter into the Venture with the Defendant. The Claimant informed the Defendant of the condition but in spite of requests for further information, he heard nothing further from the Defendant. In March 1997 he met Mr Colin Ostler an employee of the Defendant in Cairo. He told the Claimant that the Defendant was no longer interested in the joint venture as it had changed its Chairman and Managing Director and the whole project had been put on hold. The Claimant was astonished and disappointed by this information as the final stage of establishing the new company and selecting the Egyptian Financial Institutions had been reached and the new company would have been in a position to apply for tender documents and licences for individual projects. 14. As a result of this meeting and the fact that the venture had failed to materialise entirely because of the change of mind of the Defendant on 3 March 1997, and 2 April 1997, the Claimant demanded payment of expenses and a reasonable fee although he was entitled to claim for and on behalf of himself and of British Management, the full amount of the fees agreed and expenses incurred. He agreed to limit the total amount due to the sum of £150,000. 15. Following the letters of 3 March 1997 and 2 April 1997, the Claimant telephoned Mr McDonald and Mr Thompson who confirmed that they would look into the matter and Mr McDonald confirmed that he had passed the Claimant’s claim to the Defendants’ Accounts Department but the Defendants have failed to make any payment whatsoever to either the Claimant or British Management. 16. By an Assignment dated 5 March 2001, British Management assigned their interest in the Consultancy Agreement to the Claimant and notice of the said Assignment was given to the Defendants on 8 March 2001.” (1) to identify Egyptian financial firms and banks which would be interested in participating in the Venture; (2) to prepare a business study of the Venture; and (3) to meet and negotiate with, and persuade, the possible joint venturers to enter into the Venture. (1) The Claimant prepared the business study of the Venture and engaged the services of two Egyptian Accountants, Dr Mohammed Hassouna and Dr Sharif Elbardoy who prepared Valuations and feasibility studies. The Claimant was directly liable to these firms for their fees and paid them $60,000 US Dollars and 15,000 in Egyptian currency; (2) The Claimant attended a series of meetings with several large Egyptian financial firms and banks; (3) The Claimant met with and discussed the Venture with Egyptian regulatory authorities.[4]The Particulars of Claim go on to claim payment of £150,000 together with interest from the 10th March 1997.[5]The Defendant denies that any such contract was ever concluded and that any such sum was due or payable.[6]If there ever was a contract, it is common ground that the breach by the Defendant occurred on the 31st January 1996. The Claimant has known at least since that date that the existence of the contract was disputed. On the 5th March 2001, according to the Claimant, BIM assigned the benefit of the contract to him and he gave notice of this assignment to the Defendant. On the 24th July 2001 the Claimant commenced these proceedings claiming payment of the £150,000. No explanation (though obviously called for) has ever been given for the delay in commencement of the proceedings.[7]On the 7th April 2003, the trial date was fixed for the 14th July 2003 with a three day slot. On the 20th May 2003 on a company search the Defendant discovered that BIM had been struck off the register for failure to file annual returns and so notified the Claimant on the 23rd May 2003 and invited him to withdraw the action. The Claimant took no action, and accordingly on the 18th June 2003 the Defendant applied to strike out the action, and a two hour slot was given for the hearing of the application on the 26th June 2003. The only response of the Claimant was to apply on the 24th June 2003 for permission to amend and in particular to contend that he was the contracting party or one of the, contracting parties. This application was dismissed by the Judge in the Judgment and permission to appeal was refused by the Judge and by Rimer J, and accordingly I need say no more about it. A second application was made at the hearing on the 24th June 2003 for an adjournment to enable the Claimant to apply in Ireland for restoration of BIM to the Register. No step has ever been (even today) to obtain such restoration.[8]The hearing before HH Judge Green (“the Judge”) took, not two hours, but two days. The Judge sensibly decided that in view of the imminent date of trial the matter of the adjournment required a full and immediate determination, and he sat until 5.15 p.m. on the 25th June 2003 to give his extemporary judgment on the application. I have a full transcript of that judgment which was an impressive exercise. He refused an adjournment. He then had to decide the question of costs, and he ordered the Claimant to pay the Defendant’s costs on an indemnity basis (estimated at £68,000). The recording of his judgment on this issue is lost, but Counsel have done their best to reconstruct it.

ADJOURNMENT

[9]In my judgment, the Judge was fully entitled and indeed obliged to reach the conclusion which he did to refuse the adjournment he did for the reasons which he gave notwithstanding the fact that, in the absence of the restoration of BIM to the Register, the action was bound to fail. I can summarise them quite shortly: i) the application was very late. It is critically important to have in mind the five year unexplained delay in commencement of proceedings which turned on what was agreed at a meeting in 1995. ii) according to the Claimant BIM was his company, yet nothing was ever done to verify its continued existence before the 20th March 2003 though he knew that no returns had ever been filed and nothing has even today been done to rectify the position. In particular nothing has yet been done even to initiate the process of restoration to the register; iii) I have no evidence before me as to the Claimant’s financial position beyond the fact that a property in London is owned by him and his wife (I do not know its value or the respective equitable interests) and that it is mortgaged. I accordingly do not know if the Claimant has the means to proceed with an application to the Irish Court, let alone to pay the costs of this action thrown away which must on any basis fall on him. All I know is that the Claimant has been unwilling to incur any cost in respect of the restoration to date and has made no payment or offer of payment in respect of the order for costs made against him; iv) there is a gross injustice to the Defendant, having secured a trial date in this action, to require him to lose that date and to occasion it a further delay in finalising this expensive and protracted litigation with the substantial claim lying above its head; v) the claim and the evidence in support is highly dubious for the reasons given by the Judge in the Judgment. I shall not repeat what he says. My anxieties in this regard are not alleviated by the fact that there was inserted in the Claimant’s appeal bundle a version of the assignment (a critical document) quite different from that furnished for the first time at the hearing before the Judge and in its place, and no explanation has been given for the existence of these two versions. It is to be noted that the Claimant is sole signatory on both, though BIM’s Articles require the existence of two directors. There is no evidence of any involvement of Dr Hassouna in the assignment; vi) most critically of all, the Claimant’s pleaded case is totally inconsistent with the Statements of the Claimant dated the 28th February 2003 and of his solicitor Mr Judge dated the 24th June 2003 in support his claim. These make quite plain that at the date of the meeting when the alleged oral contract was made the Claimant did not disclose the existence of BIM and that the Defendant’s belief was that they were dealing with the Claimant and not BIM. In a word the evidence makes clear that BIM was party to no such contract as was pleaded and indeed it is obvious that this was the reason why the Claimant unsuccessfully and belatedly applied for permission to amend to add a personal claim by the Claimant as a contracting party; vii) the Claimant seeks to rely on subsequent documentation as throwing light on the issue, but far from supporting the Claimant’s case it negates it. A memorandum of the Defendants of August 1995 refers to a visit by the Claimant “of Personal Investment Management”, a different company based in Guernsey. The Claimant’s memorandum of a suggested date of the 1st December 1995 speaks of discussions of fees “for introducing the shareholders and establishing the company” and states that they “will be US Dollars 250,000 or US Dollars 120,000 plus 5% of the proposed company shares”. This is quite at odds with the pleaded deal as is the claim for £150,000.[10]In a word, I can be fully satisfied for the reasons given by the Judge that he was fully entitled to reach the conclusion which he did. I would however go further and hold that he was obliged to strike out the claim because for the reasons I have stated it was bound to fail.

INDEMNITY COSTS

[11]The agreed note of the Judge’s judgment on costs reads as follows:
“1. The Defendant asks for costs to be assessed on the indemnity basis. I recognise that recent authorities say that the applicant need not establish any impropriety. The right approach is to look at the history and decide whether the facts justify indemnity costs. 2. There could not be a clearer case including such matters as the late applications by the Claimant.”
[12]What the Judge held was that this was very much an out-of-the –ordinary case where having regard to the facts and matters set out in the Judgment justice required the making of such an order. The brevity of the judgment on costs on this question reflects the lateness of the hour and as part of its reasoning the matters of complaint fully set out in the Judgment.[13]In my judgment his order was fully justified by the totally irresponsible and unreasonable nature of the claim and of the conduct of the litigation. I need only particularise:(1) the total hopelessness of the Claimant’s claim on the Claimant’s own evidence;(2) the failure to respond actively when notified of the result of the company search;(3) the failure to give notice of any application for an adjournment until the actual hearing before the Judge(4) the drip feeding of material to the court (e.g. the company’s internal company documents);(5) the production of totally unsatisfactory and unexplained documentation e.g. Dr Hassouna’s receipt;(6) the introduction of his claim to amend the pleadings at the last moment in an attempt to make a new misguided case when the hopelessness of the original became apparent.[14]The Judge fully and fairly considered the issue of costs and had ample justification for the decision he reached. If I had thought that his reasoning was insufficient and it was necessary for me to exercise the discretion afresh, I would unhesitatingly reach the same conclusions for the reasons which I have given.

RESULT

[15]I therefore dismiss this appeal.