Wave Lending Ltd v Batra & Anor [2016] EWHC 2238 (Ch)

Case No HC-2008-00023[2016] EWHC 2238 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/09/2016
Before
CHIEF MASTER MARSH
Between
WAVE LENDING LTDClaimantMR GHANSHYAM SARUP BATRADefendantSFM LEGAL SERVICES LTDThird Party
Mr Kevin Pettican (instructed by Bar Direct Access) for DefendantMr Ian McCombie (instructed by Gordons LLP) for Third PartyHearing Hearing date: 15 th July 2016
JudgmentChief Master Marsh :
[1]This claim came on for trial before Mr Justice Peter Smith nearly seven years ago in October 2009. During the course of the trial, on 30th October 2009, confidential terms of settlement were agreed between the claimant and the defendant ("Mr Batra"). Those terms remain private and have not been made available to the court.[2]Mr Batra had brought an additional claim against SFM Legal Services Ltd, a firm of solicitors retained by him ("the Solicitors"). Prior to the trial, the Solicitors went into voluntary liquidation. The Solicitors did not appear at the trial and the judge directed that enquiries should be made about the reasons for their absence. The court was informed by the liquidator that the Solicitors did not intend to participate in the additional claim due to a lack of financial resources. As a consequence, and on the same date that terms of settlement were agreed between the claimant and Mr Batra, the judge made an order adjourning the claim against the solicitors sine die with permission to restore the additional claim. Although information about the events in October 2009 is sparse, it appears that an election was made by Mr Batra, who had the benefit of representation by leading counsel, not to proceed with the trial of the additional claim in the absence of the Solicitors although there seems to have been no obvious impediment to adopting that course of action.[3]On 28th October 2015 Mr Batra applied for an order that the claim against the Solicitors be restored for hearing. Mr Batra, who was by then acting in person, did not provide any grounds for his application in the application notice but merely stated that he wished to restore the case against the Solicitors for trial. Subsequently, on 25th February 2016, the liquidator issued an application seeking an order striking out the additional claim. The application notice sets out the following grounds for the application:
“1. Mr Batra has failed to provide any good reason for the Part 20 proceedings stayed on 30th October 2009 to be restored; 2. There is overwhelming evidence of fraud on the part of Mr Batra in relation to the transactions in the proceedings, and it is therefore highly probable that he would be unlikely to succeed in his claim under the principle of ex turpi causa non oritor action; 3. There is no money to be recovered from the SFM liquidation if proceedings are restored and Mr Batra succeeds; 4. Professional indemnity insurance cover for SFM in relation to it acting for Mr Batra in the transactions in the proceedings has been declined due to the dishonesty of Mr Batra and SFM; 5. No good reason has been given for the delay in applying to restore proceedings; 6. To allow the proceedings to be restored and continue would amount to an abuse of process; and 7. To leave the proceedings stayed indefinitely results in uncertainty for the parties.”
[4]The applications fall to be considered in the context of the claim and the additional claim and the events which have occurred both before and after the claim was stayed and the additional claim was adjourned sine die.

The Claim

[5]The claimant was a mortgage lender specialising in lending to buy-to-let investors. Mr Batra was a director of Mortgage 10 Ltd and an investor in his own capacity in real property. In 2007 he made twenty applications for mortgages of a long leasehold interests in flats to the claimant, and the claimant offered to lend him £4,989,500. The claimant relied on a number of representations alleged to have been made by Mr Batra. In essence the claimant alleged that Mr Batra was engaged in a form of mortgage fraud because the funds being provided by the claimant were to be used not for the acquisition of long leasehold interests but, instead, to acquire the freehold interests in the respective properties, such interests to be held by companies incorporated in the British Virgin Islands with the shares in those companies being held by a BVI trust of which Mr Batra was to be a, or possibly the, beneficiary.[6]The transactions with which the claimant was involved also concerned a number of other lenders. The twenty flats formed part of several ‘apart-hotels’ and Mr Batra's stated intention was to convert rooms in the apart-hotels into flats and to let them on assured shorthold tenancies. The overall borrowing was £16.6 million. The acquisitions incurred a cost of £11.1 million and the remaining £5 million, which was not used for the purchases, was sent to various accounts held on behalf of Mr Batra.[7]In early December 2007 a representative of the claimant visited the properties and found that they were still trading as apart-hotels and had not been converted into separate flats. At that point the claimant became concerned and made an application to the court on 21st December 2007 for a freezing order against Mr Batra for £5 million. Proceedings were then commenced by the claimant on 28th December 2007 and served in January 2008. Mr Batra has always denied any wrongdoing. At the heart of his case is the assertion that the claimant was at all material times aware of the arrangements he had made in relation to the properties and that the claimant was not deceived. The terms upon which the claim was settled remain confidential and the court is not in a position to evaluate from those terms whether the claimant or Mr Batra made any concessions as part of the overall settlement. He does not have a unilateral entitlement to override the confidentiality of the settlement terms as between himself and the claimant and in the absence of the claimant's consent, which has not been sought, it is far from clear how such an obstacle could be overcome if he is now to pursue his additional claim.

The additional claim

[8]On 11th July 2008 Mr Batra issued an additional claim against the Solicitors. The firm was incorporated as a limited company and Malcolm Graham and Wendy Ostell were the two principals. Mr Batra’s case against the Solicitors was that had they acted with reasonable care and skill: i) the claimant would not have brought proceedings against Mr Batra alleging fraudulent misrepresentation seeking restitution of the sums advanced and would not have obtained a freezing injunction; ii) Mr Batra would not have redeemed his mortgage with the Bank of Ireland which was said to have been done upon the solicitors' advice; iii) It would not have been necessary for Mr Batra to instruct another firm of solicitors to complete the acquisition and to incur liability for their fees.[9]The principal losses claimed by Mr Batra are: i) Expenses and costs arising from the claimant seeking the restitution of the sums advanced; ii) His legal costs in relation to the proceedings; iii) Early redemption fees paid to the Bank of Ireland amounting to £92,385.55; iv) Approximately £25,000 being the cost of work undertaken by the alternative firm of solicitors.[10]In addition, Mr Batra seeks an account from the Solicitors of sums received by them and payment of sums received in excess of the fee agreed for their work. (Perhaps curiously, Mr Batra does not seek repayment of the Solicitors’ fees of circa £617,000 on the basis of a total failure of consideration). Furthermore, Mr Batra seeks an account of profits he has lost from business and investment opportunities resulting from the freezing injunction.[11]A defence was filed to the additional claim. Indeed, it appears it was fully defended up to the date when the Solicitors went into voluntary liquidation in August 2009. The Solicitors alleged that Mr Batra had participated in the submission of fraudulent mortgage applications to the claimant in order dishonestly to obtain advances from the claimant. As a consequence, any claim against the Solicitors is barred by illegality and they rely on the maxim ex turpi causa non oritor actio. The Solicitors allege that to the extent Mr Batra has suffered any loss, it was caused by his own fault. Subject to those specific points, the Solicitors defence consists of a series of non-admissions in respect of Mr Batra's allegations. The Solicitors’ professional indemnity insurance.[12]The Solicitors held professional indemnity insurance with Quinn Insurance Ltd (“Quinn”) which was an authorised provider of insurance to solicitors. The policy of insurance has not been produced but the liquidator has exhibited the Law Society's Minimum Terms which will have formed the basis of the policy for the first compulsory layer of insurance.[13]Quinn appointed Levi Solicitors LLP to act for it on the question of coverage and to investigate whether Quinn was liable to indemnify the Solicitors. They wrote to Mr Graham as one of principals of the Solicitors on 26th June 2008 stating in forthright terms that, following their investigation, Quinn had concluded it was not liable to indemnify either Mr Graham or the firm. Some caution is needed when having regard to their conclusions because it provides only one side of the picture and Quinn’s conclusions have not been challenged. Nevertheless, the letter provides a clear statement of Quinn’s grounds for rejecting liability. The letter report includes the following paragraph:
“In our view there is overwhelming evidence that Mr Batra committed mortgage fraud on each of the lenders from whom he borrowed (SIC) funds and that both you and Mrs Ostell condoned his dishonesty. In each and every application, Mr Batra represented that he was borrowing mortgage funds to acquire leasehold interests in individual flats in each one of the three hotels. He sought to borrow eighty-five or ninety percent of the “purchase price” and represented that he would be providing the balance of the monies from his own funds. At no time were any of the lenders advised by either you or Mrs Ostell that in fact the lenders monies were being used to purchase the freeholds rather the leaseholds. Furthermore, these mortgage monies were not used solely to acquire eighty to ninety percent of the lease-hold properties but were a means of enabling Mr Batra to generate a profit in the region of £5 million pounds and for the lenders to pay SFM’s fees of £617,180 together with VAT. You cannot deny knowledge of these matters when you signed the fee note and wrote subsequently confirming the “profit” which had been made.”
[14]One of the concluding paragraphs of the letter is in the following terms: “For all of these reasons, we have no doubt that you were dishonest and that you condoned the dishonesty of Mrs Ostell and Mr Batra. In the circumstances Quinn will not be providing you or SFM with any cover in relation to any claim arising out of or connected to SFM’s retainer with Mr Batra or any of the lenders who advanced monies to Mr Batra." Mr Batra’s application[15]Mr Batra’s application merely applies for the claim against the solicitors to “be restored to the list for hearing”. Despite the passage of very nearly six years between the order made by Mr Justice Peter Smith and the issue of his application, no explanation whatever was given in his application about why the Part 20 claim should now be revived. The application first came on for hearing before Deputy Master Bartlett on 18th December 2015. On that occasion both Mr Batra and the liquidator were represented by counsel. Although no account of that hearing was provided, it is clear that the court proceeded on the assumption that Mr Batra wished to restore the Part 20 claim with a view to pursuing the Solicitors' professional indemnity insurers. The material part of the order provided: i) “The applicant must file and serve on the respondent and the respondents indemnity insurance provider, Quinn Insurance Ltd (or its successor firm), by 4pm on 8th January 2016 a witness statement setting out the history to date that has given rise to the present application. The applicant must also address and account for any delay in making the application to restore proceedings following the stay of the proceedings pursuant to an order of Mr Justice Peter Smith dated 30th October 2009 adjourning proceedings sine die. ii) The respondent, if so advised, may file and serve on the applicant and the indemnity insurer a statement in reply by 4pm on 29th January 2016. iii) The applicant has permission, if so advised, to join the indemnity insurers as a party to the application pursuant to their stated liability under section 1 of the third party (Rights Against Insurers) Act 2010. iv) The matter is to be relisted on a date not before the 8th February 2016 with a time estimate of one hour. The applicant must provide notice of the hearing to the indemnity insurers no less than 21 days before the hearing date.”[16]Two points arise from that order. First, Mr Batra was required not only to provide a witness statement setting out the history of the proceedings to date but also to address and account for any delay in making the application to restore the proceedings. Secondly, the court wrongly proceeded on the basis that Third Party (Rights Against Insurers) Act 2010 was in force. In fact, the Act did not come into force until 1st August 2016 and, in any event, it has no application where the insolvency and the insured incurring a liability occurred prior to the commencement of the 2010 Act. Thus, its predecessor, the 1930 Act is applicable and if Mr Batra wishes to take advantage of it, he must first obtain a judgment against the solicitors.[17]Mr Batra did not comply with the Deputy Master’s order and on 20th January 2016, on the Solicitors application, an order was made without a hearing, the material part of which is in the following terms: "Unless the defendant files and serves on the third party and the third party’s indemnity insurance provider, Quinn Direct Insurance Ltd, a witness statement setting out the history of the proceedings to date that has given rise to the defendant’s application to restore proceedings, and such evidence addresses and accounts for any delay in making the application to restore proceedings following the stay ordered by Mr Justice Peter Smith ordered on 30th October 2009 within seven days of service of this order, the defendant’s Part 20 claim against the third party do stand as struck-out without further order and the defendant shall pay the third parties costs in the Part 20 claim, to be assessed on the standard basis if not agreed.”[18]The order also required Mr Batra to pay the costs of the application which were summarily assessed in the sum of £957.20. He then applied to set aside only the costs order and on 26th February 2016 enforcement of that order was stayed until a later hearing. In any event, Mr Batra filed and served a witness statement dated 1st February 2016 in purported compliance with the unless order. The witness statement provides only a very limited explanation of the history of the proceedings giving rise to his application. More significantly, there is an issue as to whether Mr Batra has complied with the requirement of the order to address and account for the delay in making the application to restore the proceedings. That was not a point taken by the Solicitors and was first raised by the court at the hearing of the application. It is an issue to which I will return.[19]It is right to observe that the order made by Mr Justice Peter Smith adjourned the additional the claim sine die whereas, in the usual way, the main claim was stayed under the terms of a Tomlin Order. An adjournment normally relates to a specific event and, by adjourning it, the event is put off, or postponed, to a later date. Thus, the trial of a claim can be adjourned; but it is not obvious how a claim, as such, can be adjourned. An adjournment and a stay are not generally regarded as being synonymous. It may be that the parties, by use of the word adjourned rather than stayed, had in mind a temporary or relatively short-term hiatus. But it seems to me the right approach for the purposes of Mr Batra’s application is to construe the order in a way which is most favourable to him and to treat it as amounting to, in reality, a stay of the claim, without time limit, with both Mr Batra and the Solicitors having an entitlement to apply to restore the additional claim. Mr Batra’s application is made pursuant to the liberty to apply.[20]The criteria which are applicable to his application cannot be discerned directly from any authority which has been cited to me. I propose to approach the application on the basis that: i) The court has a broad discretion about whether or not it should permit Mr Batra to continue the Part 20 claim. Put another way, Mr Batra has no entitlement, as of right, to pursue the Part 20 claim in the light of the judge’s order. ii) It is for Mr Batra to satisfy the court that he should be permitted to pursue the Part 20 claim. iii) The court’s discretion should be exercised taking into account the provisions of the overriding objective. iv) Account needs to be taken of the length of the delay, the reasons for it and the likely effect of the delay on the court’s ability to conduct a fair trial. The threshold an applicant has to reach will usually become higher as time passes. v) It is also right to have some regard to the merits of the claim but I do not consider that on his application Mr Batra is obliged to show, as if he were facing a Part 24 application, that the additional claim has a real prospect of success and he has a real likelihood of making a significant recovery. However, a court may well be reluctant to allow a weak claim to be pursued after a lengthy delay. The Solicitor’s application.[21]Although the Solicitor’s application does not refer to any provision of the CPR, it is plainly made under CPR 3.4(2). Mr McCombie, who appeared for the liquidator, submitted that the application was based both upon the ground (a), that the Part 20 claim discloses is no reasonable grounds for bringing that claim and (b) that the statement of case is an abuse of the court’s process. It does not seem to me, however, that the former ground is sustainable and the focus of the Solicitor’s application is based upon the Part 20 claim being, or having become, an abuse of the court’s process. Mr McCombie made reference in his skeleton argument to CPR Part 24.2. However, the solicitors have not made an application under that provision and it seems to me it would not be right in those circumstances for the court to undertake a broad merits based review of the Part 20 application seeking to establish whether the Part 20 claim has a real prospect of success and there is no other compelling reason why the Part 20 claim should go to trial.[22]There is some degree of overlap between Mr Batra’s application and the Solicitor’s application to strike out the additional claim as an abuse of process although they are not the mirror image of each other. It was common ground that between the parties that mere delay in pursuing a claim will not normally be enough to entitle the court to strike out a claim as an abuse of the court’s process. There will normally need to be delay plus an additional factor (see: Habib Bank Ltd v Jaffer (Gulzar Haider) [2000] All ER (D) 424 (CA) and Icebird Ltd v Winegardner [2009] UKPC 24 cited at Note 3.4.3.5 of the White Book 2016). The additional claim has not been pursued because it was adjourned pursuant to an order of the court. I do not think it can be said that it was necessarily implicit in the judge’s order that an application should be made to restore the Part 20 claim within any period of time. Thus, as it appears to me, the application to strike out the claim based upon delay may add very little to Mr Batra’s application. The unless order.[23]As the Court of Appeal explained in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463, the sanction prescribed in an unless order takes effect automatically as a result of a failure to comply with its terms. Unless the party in default has applied for a relief, or the court itself decides for some exceptional reason that it should act of its own initiative, the question whether the sanction ought to apply does not require a judicial determination (see [34[ in the judgment of Moore Bick LJ). The issue I have to consider, therefore, is whether Mr Batra complied with the unless order. That involves construing what the order required him to do and establishing whether what he has done is sufficient to amount to compliance with the order. It is not necessary for him to have done more than the minimum which the order required.[24]It is also relevant to have regard to the fact that the Solicitors did not take the point about a failure to comply with the unless order until it was raised by the court at the hearing at which point it was adopted. Thus, there was no opportunity for Mr Batra to apply for relief save in the course of the hearing. No request was made by Mr Pettican for an adjournment. The evidence.[25]There are two witness statements from Mr Batra and two witness statements from Mr Mawer, the current liquidator. It is however only necessary to refer to Mr Batra’s first witness statement, made in response to the unless order, in any detail.[26]Paragraphs 3 to 18 of Mr Batra’s first statement provide a very brief summary of the background to the proceedings, and the Part 20 claim, and the events leading up to the trial in October 2009. Although it is a very brief summary, it provides an adequate history of the proceedings. Mr Batra then explains that the trial was put back by almost a week to 23rd October 2009 because he had received advice from his solicitors, Roche & Co to instruct new leading counsel, Mr Kuldip Singh QC. The liquidator (then Mr Chamberlain) was ordered to attend the trial. Mr Batra says:
“Mr Chamberlain explained to the court that there was no money in the liquidation and, therefore, he was unable to take any part in the proceedings. As a result, the judge ordered that the claim against SFM should stand adjourned sine die.”
He goes on to say in bare terms that the claim brought by the claimant was compromised in the Tomlin order.[27]Paragraphs 22 to 29 of the witness statement seek to address and account for the delay in making the application to restore the proceedings. It is appropriate to set them out in full: “22 – After I learned that SFM had gone into voluntary liquidation, I learned that they were also under investigation by the Solicitors Regulation Authority when I retained them. I subsequently learned that disciplinary hearings were commenced against the three principals of SFM, Malcolm Stewart Graham, Wendy Kathleen Ostell and Ivan Bruce, on 31st March 2008, and that, following a hearing on 14th and 15th December 2009, Graham and Ostell, both of whom were involved in my matter, were struck from the roll of solicitors. 23 – Once I saw a copy of the Solicitors’ Disciplinary Tribunal (“SDT”) report and findings, some time in May 2010, I believe, I was extremely concerned that there were significant references to my transactions, although they formed no part of the complaint against Graham and Ostell. I had had no opportunity to put forward my case as I was unaware of the proceedings but I was extremely concerned that this would be used against me. 24 – Mr Graham, who I believed to be the main principal of SFM, was declared bankrupt in 2009, before the SDT hearing, and I did not attend it. Similarly Ms Ostell did not attend the hearing. 25 – Shortly after this, I learned that Quinn had been placed in administration in March 2010. 26 – My further investigations disclosed that Mr Graham had been disqualified as a director in October 2010 for a period of 8 years. 27 – Thereafter, in October 2013, Mr Graham was convicted, on his admissions, of seven counts of tax evasion. 28 – Finally, in February 2014, Mr Graham was disqualified for a period up until 4th February 2025. In those proceedings, although Graham appears to have taken no part, it would seem that my transactions were extensively referred to. 29 – It was for the reasons given above that I was reluctant to resurrect the third party claim against SFM. I had already expended in excess of two million pounds in legal fees and I was loathed to incur further substantial costs. However, I believe that Quinn is still active in respect of existing claims and, no reason having been given for its refusal of cover in 2008, I decided in October 2015 that I ought to be able to air my complaints about SFM’s handling of my matters. I have spent almost nine years in litigation because of their failures and I believe that, whatever else these proceedings will show, I will be able to prove that I did nothing wrong, my only failing being the instruction of SFM.” [my emphasis][28]Mr Batra refers to the report and findings of the SDT. This is a lengthy document running to 330 paragraphs. It is, however, of limited relevance to Mr Batra’s application given that he was not a party, for obvious reasons, to those proceedings. However, it is right to note that the SDT proceeded upon the assumption that Mr Batra had been involved in a mortgage fraud.[29]The liquidator has drawn attention to events which are not mentioned by Mr Batra which are of significance. Mr Batra was the director of Mortgage 10 Ltd a mortgage and general insurance broker. He was therefore regulated by the Financial Services Authority, now the Financial Conduct Authority. A decision notice was issued on 3rd December 2010 giving notification that it had decided to withdraw Mr Batra’s approval to perform controlled functions in relation to his company and making a prohibition order preventing him from carrying out any such functions. The authority based its decision on the grounds that Mr Batra had been dishonest and lacked the necessary integrity. He referred that decision to the Upper Tribunal Tax and Chancery Chamber. In a decision released on 13th May 2014 the Upper Tribunal found on the evidence the authority had not established that Mr Batra was deliberately dishonest but found that he lacked integrity. His reference to the Tribunal was dismissed and the prohibition notice was upheld. On 31st March 2015 the Court of Appeal refused permission to appeal and the FCA issued a Final Notice on 17 July 2015 confirming the prohibition order.[30]The witness submission to the Tribunal and the oral hearing received a considerable body of evidence about the properties which are the subject matter of these proceedings and findings of fact were made in relation to them. In particular, the Tribunal had a witness statement from a Mr Karl Hopkins who was a business development manager with the claimant at the material time. Paragraph 18 of Mr Batra’s defence to the claim refers to Mr Hopkins’s knowledge about the structure of the purchases on the basis that the claimant was aware of the true position. However, in the Tribunal proceedings, without having heard live evidence from Mr Hopkins, the Tribunal preferred the evidence of Mr Hopkins to that of Mr Batra on material points.[31]It is, in my judgment, highly significant that in providing an account of the delay in making his application, Mr Batra omitted to mention the steps taken by the Financial Conduct Authority and his reference of the authority’s decision to the Upper Tribunal. It is unlikely to be a co-incidence that the FCA’s final notice, following on from the Upper Tribunal’s decision, is dated 17th July 2015, just a few months before Mr Batra’s application was issued.

Mr Batra’s case

[32]In essence, Mr Batra’s case is that there are no procedural difficulties which would prevent Mr Batra pursuing his claim. The Part 20 claim was due to come on for trial in October 2009 and a trial bundle was prepared for that trial. Mr Pettican submitted that there should be no difficulty in the additional claim simply being restored by a new trial date being fixed. He went on to submit that the liquidator is now in a better position than he was in 2009 because, it appears, that the liquidator has a funding arrangement with solicitors albeit that the evidence for that funding arrangement is limited. It is largely inferred from the fact that the liquidator has chosen to oppose Mr Batra’s application, and to issue his own application. Mr McCombie accepted there is a funding arrangement but said it related to the liquidation as a whole and not just Mr Batra’s claim. There is however no adequate explanation about the extent of that funding arrangement. And, to my mind, it is over simplistic to conclude that if a claim is pursued against the solicitors the liquidator will be able to fund a defence.[33]Of more significance, is the submission that Mr Batra should be entitled to pursue the Part 20 claim as a pre-cursor to pursuing a direct claim against Quinn having obtained a judgment against the Solicitors. There is no information at all about Quinn’s position because it has not responded to being given notice of Mr Batra’s application. Although Mr Pettican accepts that there has been significant delay on the part of Mr Batra, he submits that there are no other factors which should prevent Mr Batra from being permitted to pursue the Solicitors with a view to claiming under the professional indemnity policy once a judgment has been obtained. Furthermore, he says that Mr Batra has a viable claim with a realistic claim value in excess of £200,000. (Mr Batra perhaps over-optimistically values the claim at over £1 million). And he says that any issues of dishonesty are for a trial, not for the hearing of these applications.[34]Mr McCombie made full and careful submissions. The main points he makes, disregarding for present purposes the merits of the claim, are: i) In the exercise of the court’s discretion, it should bear in mind that if Mr Batra is to proceed with the additional claim, the court is possibly authorising not one claim but two claims to proceed, the second claim being a claim by Mr Batra against Quinn under the professional indemnity policy. ii) The court’s task would have been much easier in 2009. The Part 20 claim was ready for trial and there is no reason (or at least no reason Mr Batra has explained) why he did not proceed with the Part 20 claim at that stage. The court can infer he made a decision not to do so based on advice from leading counsel and he was advised to adjourn the Part 20 claim sine die. He submits that nothing of significance has changed since October 2009 and Mr Batra’s explanation of the delay is woefully inadequate. iii) There is what Mr McCombie described as a gaping hole in Mr Batra’s case because the terms upon which he settled the principal claim remain confidential and he has no entitlement to rely on them. He has not taken any steps to obtain a release from the confidentiality and, if he made a payment to the claimant, he will not be able to seek to recover it without the confidentiality being released, even assuming such a payment were to be recoverable as a matter of law. iv) Mr Batra has not produced adequate documents in support of his application. It is said the trial bundle from 2009 is available but he has not produced it. The court has not been shown the evidence he was intending to give to the court in the main trial and the Part 20 claim and there is uncertainty about whether any evidence was produced on behalf of the Solicitors. The court is not in the position to weigh up the merits of the Part 20 claim without seeing the trial bundle. v) Quinn has strongly rejected liability on the basis set out in the letter from Levi Solicitors LLP and in 2009 issued proceedings against the Solicitors and Mr Graham seeking to recover the costs of its investigation into whether or not the Solicitors and Mr Graham were entitled to an indemnity. Thus, even if Mr Batra were able to obtain a judgment against the Solicitors, he faces very real difficulty in obtaining an indemnity under the professional indemnity policy. vi) Mr Batra’s motivation for seeking to restore the Part 20 claim is currently in any event, expressed in terms of seeking to clear his name, not to make a financial recovery (see the passage marked his witness statement). The court’s resources should not be allocated to a claim in those circumstances and neither should the liquidation be affected at this late stage.[35]Mr McCombie also made detailed submissions about the merits of Mr Batra’s claim. He pointed to the very limited nature Mr Batra’s defence to the main claim. The defence itself largely consists of a series of non-admissions and bare denials. Mr Batra relies particularly upon knowledge said to be imputed to Wave by virtue of the Solicitors acting for Wave as well as Mr Batra. The fundamental difficulty, it is said, for Mr Batra is that the basis of the mortgage applications was inconsistent with the legal reality. The applications were all based upon the premise that the lending in each case was 90% loan to value whereas when all the loans are taken together, the loan to value ratio was 140%. Mr Batra was able to borrow in the region of £5 million more than he needed to acquire the leasehold interest and that additional funding was retained by him and not used for the original purpose. In any event, the mortgage funding was used to acquire the freeholds, through a trust set up, an arrangement which was not revealed to the lenders. Mr McCombie submits that the whole borrowing arrangement was tainted by fraud thus making it impossible for Mr Batra to pursue a claim against the Solicitors.

Decision

[36]The starting point is to consider whether as a consequence of the unless order, the Part 20 claim has been struck out. The order made by the Deputy Master, which is reflected in the unless order, set out with some care the information which Mr Batra was required to provide in his witness statement. The order required him to address and account for any delay. Although Mr Batra is a litigant in person, given his level of sophistication, he could not have been in any doubt about what was required of him. Indeed, counsel represented him when the original order was made. It seems to me that an order expressed in those terms clearly contemplated that a full account would be given particularly as the period of delay which fell to be explained was approximately six years. The witness statement he has provided refers to five events in that six year period: i) The occasion in May 2010 when Mr Batra saw a copy of the SDT report and findings. ii) Quinn being placed in administration in March 2010. iii) Mr Graham being disqualified as a director in October 2010. iv) Mr Graham’s conviction in October 2013 of seven counts of tax evasion. v) Mr Graham’s disqualification in February 2014. The reference in paragraph 28 of Mr Batra’s witness statement to Mr Graham’s disqualification in 2014 is not clear because Mr Graham was struck off as a solicitor in December 2009.[37]Although Mr Batra says that these events were the reasons why he delayed in making the application, it is difficult to accept his evidence on this point for three reasons. First, save for the entry into administration of Quinn in March 2010, none of the events he relied upon appear to be reasons to delay pursuing the claim. Secondly, there are long gaps between the events which are not explained. For example, there is a gap of more than three years between Quinn going into administration and Mr Graham’s conviction (for unrelated offences) and his striking off. Thirdly, the disciplinary proceedings brought against Mr Batra by the FCA, his reference to the Upper Tribunal and unsuccessfully seeking permission to appeal, are plainly much more material than the events he lists. It is impossible to ignore the obvious link between the FCA’s decision in mid-2015, after the decision of the Upper Tribunal, and the issue of the application in October 2015.[38]I am satisfied that Mr Batra’s witness statement falls a long way short of what was required by the unless order. There was significant failure on his part to account for the delay not just in what he chose to reveal but, more importantly, in what he chose to suppress. Mr Batra’s witness statement date 1st February 2016 is not only inadequate but it is also misleading. On that basis, by virtue of the failure to comply with the unless order, the Part 20 claim was struck out seven days after service of the order dated 20th January 2016 unless the court, exceptionally, takes the view that Mr Batra should be granted relief from sanctions in the absence of an application by him. In considering the possibility of granting relief, some account must be taken of the fact that the issue only arose at the hearing and Mr Batra did not have the opportunity to explain himself in a witness statement.[39]Applying the well-known guidance derived from Mitchell v News Group Newspapers [2013] EWCA Civ 1537, as explained in Denton v TH White Ltd [2014] EWCA Civ 906, the first two stages can be dealt with simply. The breach of the order was plainly serious because the court required Mr Batra to explain the basis of his application in circumstances which required full details to be provided. There is no reason, let alone a good reason for the failure to do so. There was an almost complete failure to address the requirements of the order and, importantly, a decision was made by Mr Batra to suppress information which he must have appreciated would be relevant. The third stage of the test requires the court to evaluate all the circumstances of the case including the provisions in CPR 3.9(1) (a) and (b).[40]Mr Batra’s application was made nearly six years after the additional claim was adjourned without any explanation being given for the adjournment. It should not have been necessary for the court to make an order requiring him to provide an explanation, let alone an unless order requiring compliance. It seems to me that the nature of Mr Batra’s application itself calls into play the criteria in CPR 3.9(1)(a) because of the inevitable difficulty of a claim being re-started after a lengthy delay. And the application has been considerably delayed because of the need for the original order made by the Deputy Master and the unless order. The wider considerations of the claim and additional claim point towards the need for finality and in this connection Mr Batra’s primary motivation in pursuing the application, namely an attempt to clear his name, after similar issues have been extensively canvassed in the Upper Tribunal, is unhelpful to him because in this type of claim the primary purpose of litigation is to provide a financial remedy.[41]In the circumstances of this case, I can see no reason why it is unjust for the court to decline to grant relief from sanctions. It is of particular significance that one of reasons for Mr Batra having failed to comply with the unless order is that he knowingly misled the court about a material manner.[42]That suffices to dispose of Mr Batra’s application but it is right to deal briefly with it and with the liquidator’s application. Mr Batra’s application is based upon the premise that it is open to him simply to revive the Part 20 claim and to bring it on immediately for trial without any further significant preparations. To my mind such a premise is obviously wrong and Mr Batra’s Part 20 claim would, if it were to be pursued, require a careful review and amendment. The first point to be addressed is whether Mr Batra would be able to obtain agreement from the Claimant to rely upon the confidential terms of settlement (assuming Mr Batra is willing for that to happen). Secondly, if that hurdle is overcome, the case in relation to the main element of loss would need to be re-pleaded or a part of the claim would need to be excised. Thirdly, the breach of duty claim would need to be reconsidered in the light of subsequent events and in particular the findings in the SDT. Fourthly, the claim for loss, other than the indemnity for liability to the claimant, would need to be reconsidered in the light of subsequent events.[43]In all likelihood there would need to be further disclosure and a further opportunity for witness evidence to be exchanged. That point can only be dealt with in the most general terms because Mr Batra has not provided the court with the witness evidence which was to be relied upon in October 2009.[44]Although I accept Mr Pettican’s submissions that it is not right for the court to form a concluded view about whether Mr Batra was involved in mortgage fraud, it is possible to form a broad impression about the merits. Mr McCombie has pointed out with some force that Mr Batra has never provided a proper explanation for the additional £5 million of borrowing which was not required for the purchases. It is clear that Mr Batra faces very real difficulty in establishing that the borrowing arrangements, under which the lenders were told they were lending against long leasehold titles were bona fide not just because of the “surplus” of borrowing but also because the borrowing was used to acquire freeholds. In that respect, Mr Batra’s evidence is contradictory. In his Part 20 claim he pleads that the freehold estates would be owned by BVI companies with the shares held on trust for himself as “sole beneficiary”. However, in his second witness statement made in support of his application, and in response to the liquidators, he says:
“I was and am not the ultimate beneficiary of the BVI companies.”
[45]There is no direct evidence about prejudice arising from the delay. It does seem to me, however, that a trial of the Part 20 claim, likely now to take place well into 2017, would be far more difficult to conduct fairly (that is fairly to both sides) than it would have been in 2009. In any event, Mr Batra’s motivation for seeking to pursue the Part 20 claim appears to be primarily related to his reputation rather than to seek financial relief. Even if he is motivated to seek a financial remedy, his ability to make a recovery under the Solicitors’ professional indemnity policy is very much in doubt.[46]I turn finally to deal briefly with the liquidator’s application. It naturally follows from the dismissal of Mr Batra’s application that the Part 20 claim should be struck out. The judge’s order permitted the parties to apply. Mr Batra has done so and has failed to obtain the court’s approval to the Part 20 claim being restored. He could only make a further application to restore the Part 20 claim if there were to be a material change of circumstances such that information which was not available to him for the purposes of this application could be placed before the court. He is not entitled to re-run this application on an improved basis.[47]It is unsatisfactory for claims to lie dormant for lengthy periods of time. One of the fundamental changes brought about by the introduction of the CPR was that the court is given the ability to control litigation in accordance with the overriding objective. Although the delay by itself may not have been sufficient to found the striking out the claim as an abuse of the court’s process, it seems to me that Mr Batra’s failed application, the failure to provide support for it and his misleading evidence provide an ample basis for the claim to be struck out. Had the unless order not taken effect, I would have dismissed Mr Batra’s application and struck out the Part 20 claim as an abuse of the court’s process.