Pourghazi v Kamyab & Ors [2018] EWHC 3189 (Ch)

Case No HC-2015-001597[2018] EWHC 3189 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, 7 Rolls Buildings, Fetter LaneDate 29 October 2018
London
EC4A 1NL
Before
CHIEF MASTER MARSH
Between
MOHAMMED ALI POURGHAZICLAIMANT
This Transcript has been approved by the Judge.The Transcription Agency hereby certifies that the above is an accurate and complete recording of the proceedings or part thereof.The Transcription Agency, 24-28 High Street, Hythe, Kent, CT21 5ATTel: 01303 230038Email: court@thetranscriptionagency.com
Legal RepresentationMr Michael Pryor (of counsel), Mr Fred Banning (solicitor) on behalf of Hamid Kamyab and Neshat MangiliMr Joshua Munro (of counsel), Mr James Bailey (solicitor), Ms Caitlin McLean (solicitor) on behalf of Investec Bank (Channel Islands) Limited
JudgmentChief Master Marsh:
[1]This is my judgment in relation to an application that was heard on Friday 26 October 2018. This claim was commenced in 2015 and since then it has, in various manifestations, been before the Court on very numerous occasions.[2]Briefly, the background is that the Claimant, Mr Pourghazi, obtained judgment following a trial against Mr Kamyab, the First Defendant. It was established at the trial that Mr Pourghazi had been the subject of fraudulent misrepresentations which induced him to invest in properties acquired by Mr Kamyab. At the trial, Mr Kamyab was found to have acted dishonestly.[3]Subsequently Mr Pourghazi obtained charging orders against a considerable number of properties, some of which only were registered in Mr Kamyab’s name. In some cases, properties were registered in the names of others, including members of Mr Kamyab’s family. Mr Pourghazi sought to establish that Mr Kamyab had an interest in those third party properties.[4]Mr Kamyab had a good relationship with HSBC Private Bank Limited, which became the first additional party to the proceedings, and Mr Kamyab was able to borrow substantial sums that were loaned on ‘all monies’ basis secured on a portfolio of property. HSBC was fully secured and as part of steps taken to recover sums due to him, Mr Pourghazi applied to marshal the securities held by HSBC to enable Mr Pourghazi to obtain access to the equity in those properties which are subject to charging orders he had obtained.[5]Investec Bank (Channel Islands) Limited also obtained a judgment or judgments against Mr Kamyab and was owed substantial sums. It also obtained a number of charging orders. Investec became the second additional party.[6]A further judgment creditor, Sun Investments Limited became the third additional party. Sun Investments is of no direct relevance to the current position.[7]On 21 April 2016, Mr Pourghazi and Investec issued separate applications seeking similar relief, namely for the securities held by HSBC to be marshalled. I will come in a moment to the full relevant chronological history of events but, put shortly, on 12 January 2018 Investec assigned its debt and its entitlement to pursue its marshalling claim to Mr Pourghazi and on 15 May 2018 Mr Pourghazi and the two principal Defendants to the marshalling claims reached agreement to resolve those claims. On 21 May 2018, a Tomlin order was entered into and sealed by the Court.[8]The issue for the Court is whether Investec has any residual liability by virtue of having been a party to the claim, and having remained a party to the marshalling claim after the date of the assignment. There are two further points which I think provide the remainder of the overall context.[9]First, the marshalling claim is best seen as a subset of the overall claim in which Mr Pourghazi sought orders for sale and the marshalling claim arises from the two application notices to which I have referred and was pursued as it were as if it had a life of its own and as if it had been commenced by issuing a separate claim form or claim forms. Secondly, in the marshalling claim the principal issue that emerged was whether certain properties registered in the name of the Second and Third Defendants, who are Mr Kamyab’s son and daughter in law, were held beneficially for Mr Kamyab. Those properties were also subject to charges held in favour of HSBC. I will, for convenience, adopt the description of the Second and Third Defendants as the “Core Defendants”.[10]The matter that came before me on Friday 26 October 2018 was an application notice issued on 4 July 2018 by the Core Defendants by which they seek orders against Investec. First, they apply for an order under CPR Part 24 for the dismissal of Investec’s application for marshalling dated 21 April 2016. Secondly, they apply for an order that Investec pays the Core Defendants’ costs of the marshalling claim up to 12 January 2018; that is the date of the assignment.[11]At the hearing, Mr Michael Pryor appeared for the Core Defendants and Mr Joshua Munro for Investec. It is relevant to note that Mr Munro is instructed by Shepherd and Wedderburn LLP who have acted for Investec throughout; that is both before and after the assignment to which I have referred.[12]There are ten relevant chronological events, some of which are of greater importance than others, which I need to go through to set the scene.[13]First, on 1 July 2016, in the marshalling claim, points of claim were served by Mr Pourghazi and Investec jointly. It was a hybrid document pursuing marshalling claims that were their individual entitlement but, for convenience, they were made in one points of claim with separate statements of truth signed respectively by their solicitors. Secondly, on 5 July 2016 an offer was made on behalf of the Core Defendants. The offer, the details are which are not of great significance, were, and this is common ground, significantly better than the outcome contained in the agreement reached in May 2018. Under the offer, the Core Defendants were prepared to agree that the Marshalling Claimants (Mr Pourghazi and Investec) would be entitled to funds in the amount of £455,716 from the proceeds of sale of the relevant properties. The offer made on 5 July 2016 was not accepted.[14]There is then a lengthy period before the third relevant event which took place on 12 October 2017. On that occasion, an order was made in relation to the principal proceedings concerning orders for sale. There was, however, by that date concern about whether the marshalling proceedings were going to move forward and in paragraph 7 of the order directed that the Marshalling Claimants were by 4pm on 27 October 2017 to inform the Court by letter what steps they intended to take in those proceedings. It is a matter of regret that Investec did not respond to that order.[15]The fourth event took place on 5 December 2017. A case management conference was held in the marshalling proceedings and a five day trial of those proceedings was fixed to take place before me on 21 May 2018. By then it was already mooted that there would be an assignment as between Investec and Mr Pourghazi and there was some concern about the delay in that intended events taking place.[16]Paragraph 3 of my order gave Mr Pourghazi permission, if so advised, to file and serve amended points of claim reflecting an assignment of Investec’s claims. The amended points of claim were to be served by 12 January 2018. The order provided that in the absence of such an amendment, Investec’s marshalling claim was to be dismissed.[17]The fifth event is that the assignment as between Investec and Mr Pourghazi took place on 12 January 2018. The Core Defendants were not a party to that agreement. The Core Defendants and the Court have only been provided with a heavily redacted version of the assignment agreement.[18]It is clear that the first part of recital G, at least three definitions, the whole of paragraphs 3 to 5 and part of paragraph 6.1 have been redacted. At risk of stating the obvious, it was Investec’s decision to provide the Core Defendants with a redacted version of the assignment and the consequences of that decision will need to be considered in a moment. It may be however that the assignment itself has limited relevance or importance to the matter in hand.[19]Recital F is a general statement about what was intended. The Claimants as they are defined in the agreement include both Investec and Mr Pourghazi. Recital F reads:
“It is the intention of the Claimants that following the assignment of the debt by Investec to the Claimant notice of such assignment will be given to the First Defendant, his trustee in bankruptcy, HSBC and the Kamyab opponents following which Investec will cease to be a party to the proceedings.”
[20]Clause 2 of the agreement is the core operative provision, the material part of which reads:
“Investec hereby unconditionally, irrevocably and absolutely assigns to the assignee [Mr Pourghazi] all Investec’s legal and beneficial rights, title, interest and benefits in and to the debt and the security and all its rights to enforce the debt and the security including all of its interest in the proceedings, including all of its interest in the marshalling application.”
[21]The marshalling application is a defined term and it is defined to include the claims made by both Investec and the assignee. It is not for the Court to speculate about what has been redacted from the assignment but plainly the Court has not been provided with the full commercial arrangement that was entered into on that occasion between Mr Pourghazi and Investec. The corollary is that the Core Defendants are in the same position to the extent that the assignment is material context in which the later agreement, that is the agreement between Mr Pourghazi and the core Defendants, falls to be construed. Plainly the value of the assignment as a contextual document is limited because the Core Defendants did not know precisely what the terms of the assignment comprised.[22]It is right to highlight, however, recital F to the assignment which states in terms that Investec would cease to be a party following notice of the assignment being given.[23]It is however only a recital, there may or may not be machinery in the agreement to implement it. It could have been stated in terms in the agreement what was to happen but that is not a matter which is known to the court or the Core Defendants.[24]I would make three points at this stage about the assignment. First, it is trite that an assignment cannot assign a liability. The assignment on its own could not affect Investec’s position as a party to the Marshalling claim. Secondly, the assignment could not affect the core Defendant’s position because they were not a party to it. Thirdly, and this is a statement of fact rather than something that arises from the assignment, no step was taken either by Investec or Mr Pourghazi after 12 January 2018 to apply to remove Investec as a party to the claim or, as it were, to tidy up any issues that there might have been arising from Investec having been a party to the claim.[25]The sixth element of the chronology is that on 12 January 2018, that is the day on which the assignment was executed, Shepherd and Wedderburn LLP applied on behalf of Investec for a 14 day extension to the terms of 5 December 2017 order.[26]The seventh item in the chronology is that on 19 January 2018 Shepherd and Wedderburn, acting on behalf of Investec, issued an amended an application notice, amending the application made on 12 January to apply for relief from sanctions on the basis that the amended points of claim were served only on 12 January at a time shortly after 17:00 hours. It follows I think plainly that it cannot be said Investec had ceased to play any part in the Marshalling claim after the assignment because its solicitors who had acted throughout remained on the Court record as Investec’s solicitors and took steps in the claim on behalf of Investec.[27]The eighth chronological step is that amended points of claim and subsequently re-amended points of claim were served. The terms of those amended and re-amended points of claim are not of great significance. They reflect that an assignment had taken place and the claim in its amended form is a claim made by Mr Pourghazi in respect of the debts that had been due to him and the debts which had been due to Investec. It seems to me nothing further need be said about that pleading.[28]The ninth step in the chronology is perhaps the most important. On 15 May 2018 an agreement was reached between Mr Pourghazi and the Core Defendants and that agreement was reached just six or so days before the trial of the marshalling claim was due to commence on 21 May 2018.[29]The agreement is only between Mr Pourghazi and the Core Defendants. Investec is not a party to the agreement. It must follow from that absence that Investec could not be bound by the agreement and could only be indirectly affected by it. It is true that the Core Defendants could, as part of the agreement, have entered into a commitment with Mr Pourghazi that they would not pursue steps adverse to Investec subsequently and the primary issue that arises before me on the Core Defendants’ application is whether the agreement and the subsequent Tomlin order can be construed to achieve that outcome. It is not suggested that the agreement or the Tomlin order are subject to an implied term.[30]The settlement agreement at recital A adopts careful wording to define the application and the dispute. The recital reads: “On 21 April 2016 party A [Mr Pourghazi] made the application in Court proceedings seeking to marshal in two properties registered in the names of party B and party C [the Core Defendants] as set out in the re-amended points of claim file pursuant to the order of Deputy Master Bartlett dated 6 April 2018 (the Dispute)[31]The application as it is referred to there is undoubtedly the application made in 2016 by Mr Pourghazi. The Dispute is defined by reference to the re-amended points of claim and therefore in the latter part of the recital, reference is made to the combined claim by then being pursued by Mr Pourghazi alone.[32]Recital B is also important. It reads:
“The parties have settled their differences and have agreed terms for the full and final settlement of the dispute and wish to record those terms of settlement on a binding basis in this agreement.”
The parties as referred to in recital B can only be Mr Pourghazi and the Core Defendants and their differences as a matter of plain reading can only be the differences between those parties.[33]Clause 3 of the agreement is for present purposes the central operational clause. It is headed:
“Stay of the application.”
The application is, as I have indicated, clearly a reference to Mr Pourghazi’s application.[34]The clause refers to obtaining an order in the form of annexe A. Annexe A is a draft Tomlin order. Save for alterations to the order that were required by the Court, the order as made is the same as the draft annexed to the agreement. The draft order and the order as approved refer expressly to the Claimant’s application dated 21 April 2016, that is the application made by Mr Pourghazi.[35]A further recital refers to an agreement between the Claimant Mr Pourghazi and the Core Defendants having agreed to settle the application. I think it is plain that is intended to be a reference to the Claimant’s application I mentioned earlier and the principal paragraph of the order, which is paragraph 1, is in terms that all further proceedings on the Claimant’s application be stayed except for the purpose of carrying the terms of the agreement into effect.[36]The tenth part of the chronology is that on 21 May 2018 two orders were made. The first was a Tomlin order as I have indicated substantially in the form that had been agreed. The second order was an order which dealt with the marshalling claim made by Sun. It also made provision for the Core Defendants if they wished to pursue a claim for costs as against Investec by triggering such a claim with the service of a skeleton argument on 11 June 2018.[37]I have been shown an exchange of emails which leads up to that second order but to my mind the second order is of limited relevance or assistance despite it explicitly referring in a recital to Investec’s application thereby plainly putting a clear line between Mr Pourghazi’s application and Investec’s application. It seems to me when the Court is striving to understand what it is that was agreed, and what was the effect of the agreement between Mr Pourghazi and the Core Defendants, and the effect of the Tomlin order, it is not right to have regard to those separate events which are not part of the relevant context. Although the Tomlin order as made on 21 May 2018 falls to be construed as a separate document, in effect matters crystallised on 15 May 2018 and it is right that the focus of the Court’s consideration is in that direction rather than taken to separate and peripheral matters.[38]Mr Pryor’s case put shortly is that the arrangements that were agreed as between the Core Defendants and Mr Pourghazi had no bearing whatever and no limiting effect on the Core Defendants’ entitlement to pursue a claim for costs as against Investec and he submits that taking into account the broad discretion the Court has under CPR 44.2 and taking into account the offer that was rejected, the right order for the Court to make is that Investec should pay the Core Defendants’ costs up to the point at which the assignment took place on the basis that costs follow the event.[39]It would have been open to Investec to have applied to be released from the claim, to have been removed as a party following the assignment and on such an application the Court would have been entitled to consider what order for costs should have been made. That step was not taken and it is said that there is no reason why the Court should now be in a different position by virtue of the agreement that has been reached.[40]Mr Munro’s submission can perhaps be boiled down to these propositions. First, at a headline level the core Defendants he says are attempting to circumvent the Tomlin order and the settlement agreement and the Court should take a commercial view of the Tomlin order and the settlement, and construe them on the basis that the Investec claim has been settled. Secondly, and Mr Munro submits that the Investec claim following the assignment was being prosecuted by Mr Pourghazi and that he had authority to settle the claim. Thirdly, he says, looking at the terms that were agreed objectively, Mr Pourghazi would have intended that no costs claims could come back to haunt him at a later date. In passing of course it is right, but it is not only Mr Pourghazi’s intention that is relevant but the intention of both parties. Fourthly, he submits that where the Tomlin order makes reference to the Claimant’s application, it should be construed as meaning the entire claim. Fifthly, if those submissions do not bear fruit Mr Munro submits that it would be wrong for the Court to grant judgment under the Part 24 application because if his submissions are rejected it means the Investec application is live and can be pursued by Investec.[41]I need not dwell more than very briefly on the principles of construction that are applicable. Mr Munro has referred to a decision of the House of Lords in Sirius International Insurance Co v FAI General Insurance Limited [2004] UK HL 54 and in particular to paragraph 13 of the speech of Lord Steyn. The case concerns terms agreed in a Tomlin order and Lord Steyn observed that:
“The Tomlin order must be construed as a commercial instrument.”
[42]It seems to me that, without in anyway disregarding the observations made by Lord Steyn at paragraph 18 in his speech, the better approach is to have firmly in mind the principles of construction which the Supreme Court has discussed in three more recent decisions, Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36 and more recently Wood v Capita Insurance Services Limited [2017] UKSC 24.[43]I have particularly in mind the summary principles that are set out in the judgment of Lord Neuberger in Arnold v Britton paragraphs 15 to 23. At paragraph 17 Lord Neuberger makes remarks about the reliance that may be placed on commercial common sense and suggests that Courts need to be careful to avoid losing sight of the language that has been used in the agreement that is under consideration.[44]When looking at the context in which the settlement agreement is to be construed and the Tomlin order, repeating what I have said already, it is important that the Core Defendants only had the redacted assignment agreement. Only Investec knew what the full picture was.[45]As a headline point it seems to me it is important to distinguish between two quite separate things. First, there is the effect of the assignment and the transfer of the marshalling claim, that is the cause of action that was vested in Investec. Secondly, there is the disposal of Investec’s role within the marshalling proceedings. The two are to my mind quite distinct.[46]By analogy, albeit imperfect, if a party serves a notice of discontinuance that will have the effect of concluding that party’s ability to pursue a cause of action in the claim, but it does not conclude necessarily the Court’s role in relation to that party. More directly in relation to the facts here, the assignment by a party to a claim of its cause of action does not give it an automatic entitlement to be removed from the claim without consequential orders being made, if they are appropriate, and certainly does not have the automatic effect of removing a party from the claim. A party to a claim remains a party unless and until the Court orders otherwise.[47]When considering the issue of construction there are five points I consider to be of particular importance. First, the settlement agreement is silent about Investec’s position. There is within the settlement agreement no reservation made about the Core Defendants’ entitlement to pursue a claim against Investec but equally there is no provision that inhibits any step they might wish to take. It would have been possible to have stated in express terms that as between the Core Defendants and Mr Pourghazi that the Core Defendants would not pursue Investec and as between those parties that would have been contractually binding. Secondly, recital A to the settlement agreement quite clearly defines the application as being Mr Pourghazi’s application and there is no reference within the settlement agreement to Investec’s application; and, equally, the dispute as it is defined is plainly the dispute that is between the parties to the agreement, not Investec’s dispute. Thirdly, the recital settles the parties’ differences and those differences are the ones that arise between Mr Pourghazi and the core Defendants, not Investec. Fourthly, the draft Tomlin order and the order as made expressly define the scope of the settlement as relating to Mr Pourghazi’s application and not the application made by Investec. The fifth point concerns the assignment. To my mind, it has little relevance other than to form context in which the settlement agreement was reached. It could not affect Investec’s accrued obligation; that is an inchoate obligation to the core Defendants, an obligation that might arise if an application was made at the relevant time. It seems to me the assignment is neutral and certainly given that it was heavily redacted it is not a part of the overall context that can bear heavily on my determination because the core Defendants were unaware of its full terms.[48]In conclusion, it seems to me the outcome is clear. Whether the agreement or the Tomlin order or both are construed, their express terms do not resolve the position as between Investec and the core Defendants. First, Investec is not a party to either document. Secondly, there was no agreement by the core Defendants not to pursue Investec.[49]Thirdly, the agreement is silent about the effect of the assignment on the litigation and putting those same points another way, the agreement deals with the relief sought based on the rights asserted as between Mr Pourghazi and the Core Defendants. That included the rights that had been assigned but it did not purport to conclude the outcome of the proceedings as between Investec and the Core Defendants. Investec remained a party to the proceedings and continued after the assignment to play a role in it.[50]Mr Munro’s submission that the Court should take a commercial view of the agreement and the Tomlin order would to my mind amount to a rewriting of the bargain made between Mr Pourghazi and the core Defendants. It was a bargain made in language that is clear, or at least clear enough. It is impossible to conclude that the settlement agreement and the Tomlin order jointly intended that Investec’s position would be resolved by its terms. Although it is a subsidiary point it is far from clear how it could be said that Mr Pourghazi had, or could have had, authority to conclude an agreement that effected Investec’s position.[51]It is notable that Investec’s solicitors continued to act in the claim after the assignment and that was a fact that was known to the parties to the settlement agreement and is part of the context in which it was made. But the real point is that if there had been an intention to resolve Investec’s position, to resolve Investec’s accrued inchoate obligation arising from the period before the assignment, clear words would have been needed and they are absent. Equally, it would have been possible as between the parties to the agreement to have resolved as between them that Investec would not be pursued, but there is nothing in the words used that enables the Court to reach that conclusion.[52]Ultimately it might be that the agreement proves to be a bad bargain for Mr Pourghazi but that is not to the point. It is not for the Court to rewrite the bargain that has been made.[53]Turning then to the Part 24 application. The position is that Investec’s application made in 2016, albeit a husk after the assignment has not been resolved. Investec is still a party to the claim and the Court is able to deal with it.[54]I am not entirely convinced that an application under CPR Part 24.2 is necessary but it is certainly the case that the Court is able to resolve Investec’s position and to dismiss its claim. Whether that is done by granting judgment on the basis that there is nothing left in the application or simply as a case management decision matters not. Investec’s application should be dismissed.[55]As to the costs, it seems to me right that costs should follow the event. Investec pursued a claim having rejected what, as it turns out to have been, was a generous offer. The settlement was on a drop hands basis. I can see no good reason to conclude other than that costs should follow the event.