Barons Finance Ltd v Barons Bridging Finance 1 Ltd & Ors [2018] EWHC 496 (Ch)

[2018] EWHC 496 (Ch)Case No CR-2013-007776IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND & WALESINSOLVENCY AND COMPANIES LISTVenue 7 Rolls Buildings, Fetter LaneLondon, EC4A 1NLDate 21 March 2018
Before
DAVID STONE (sitting as a Deputy High Court Judge)
Between
Barons Finance Limited (in liquidation)Claimant(1) Barons Bridging Finance 1 LimitedDefendants(2) Reddy Corporation Limited(3) Mr Dharam Prakesh Gopee
Mr Oliver Assersohn (instructed by Stephensons Solicitors LLP) for Claimant for The Defendants were not representedHearing Hearing date: 20 February 2018Additional written submissions provided on 23 February 2018
Judgment ApprovedDavid Stone (sitting as Deputy High Court Judge):
[1]Mr Sharam Prakesh Gopee was a money lender. He carried out this activity through Barons Finance Limited (“BFL”). The interest rates imposed by Mr Gopee were high (3.5% per month): Mr Gopee described himself as a “lender of last resort.” When lending money, BFL took a registered interest over the homes of the people to whom it lent money. Unfortunately, neither Mr Gopee nor BFL was properly licensed to lend money in the way that they did, and it now seems likely that most of the loans were invalid. However, in 2012 Mr Gopee purported to assign the book of loans (and hence the registered interests over people’s homes) from BFL to two other companies he controlled, Barons Bridging Finance 1 Limited (“BBF1”) and Reddy Corporation Limited (“Reddy”).[2]Mr Gopee is now in jail, BFL is in liquidation, and the affairs of BBF1 and Reddy are being managed by the Official Receiver. These proceedings are to determine whether the purported assignment in 2012 was valid. Until that is determined, the individuals and families who borrowed money from Mr Gopee cannot properly deal with their homes because of the registered interests. This matter is therefore important and urgent. If, as the liquidator of BFL asserts, the assignment was invalid, then the liquidator can deal with the charges, and release the registered interests on any loans which are invalid or have been fully repaid. If the assignment was valid, then it is the Official Receiver who will need to deal with the issue on behalf of BBF1 and Reddy.[3]There were before me a number of applications which I determined at the hearing, and indicated that I would give my reasons later. At the hearing, I did not determine the main application relating to the validity of the 2012 assignment. These are my reasons in relation to the applications I did determine at the hearing, and my judgment on the validity of the assignment.

Narrative

[4]The background facts are unfortunate, but can be briefly stated.[5]BFL was incorporated on 2 May 2000. It was a money lender. As noted by HHJ Mackie QC in the London Mercantile Court ([2013] EWHC 153 (Ch)), ‘[t]he loans [made by BFL] were generally made to people who have arrived in this country quite recently and are under severe financial pressure, at high rates of interest usually secured by charges on the borrowers’ homes.” BFL tended to lend sums of money less than £25,000. On lending money, it would take a registered interest over real property owned by the borrower. Often the initial value of the loan was a small fraction of the value of the property over which the charge was taken. BFL was at all relevant times for these purposes controlled by Mr Gopee.[6]BFL was involved in two previous disputes relevant to the matter before me. In one, Mr James and Mrs Josephine Mayendesa obtained a default costs certificate against BFL on 28 October 2011 in the sum of £16,243.23. In the other, BFL was in dispute with Mr Michael Kelly over a property in Dale Park Road. Mr Kelly also had a mortgage from Kensington Mortgage Company Limited (“KMC”). BFL obtained judgment against Mr Kelly for £205,378 in 2011. I will return to these disputes below.[7]On 9 May 2012, a petition for winding up was presented by Mr and Mrs Mayendesa, and BFL was wound up on 19 September 2012. Mr Alan Coleman was appointed as liquidator with effect from 26 November 2012.[8]In the process of liquidating BFL, on 26 February 2013 Mr Gopee presented to Mr Coleman a Deed of Assignment dated 31 March 2012 (the “Deed”) which purported to assign BFL’s loan book to BBF1 and Reddy, two other companies controlled by Mr Gopee. The Deed was signed by Mr Gopee on behalf of all three corporate entities, and witnessed by his daughter.[9]On behalf of BFL, Mr Coleman commenced proceedings in this court, alleging that the Deed was not made on 31 March 2012, but later, such that it was void for having been made after the relevant date in the liquidation. Further, it was alleged that the Deed was at an undervalue, as well as being a transaction to defraud creditors. Mr Gopee denied those allegations.[10]BFL’s claim was heard by Mr David Halpern QC sitting as a Deputy High Court Judge on 10 July 2015. Mr Gopee appeared at those proceedings on behalf of BBF1, Reddy and himself. Mr Halpern’s judgment can be found at [2015] EWHC 2007 (Ch). He found that the assignment was void, a transaction to defraud creditors and that the transaction was at an undervalue.[11]Mr Gopee appealed to the Court of Appeal, which allowed the appeal on the basis that Mr Gopee had not had a fair trial before Mr Halpern. The Court of Appeal set aside Mr Halpern’s judgment, and remitted the matter back to the High Court to be determined by a judge other than Mr Halpern. The Court of Appeal’s judgment can be found at [2016] EWCA Civ 550.[12]Following orders from Mann J on 2 February 2017, BFL amended its Particulars of Claim to attempt to deal with some of the criticisms made by Mr Gopee in the Court of Appeal. Mann J also made orders requiring Mr Gopee to set out in writing “the precise circumstances of when, where and how the Deed was drawn up.”[13]On 8 March 2017, Mr Gopee provided a witness statement in which he provided some, but not all, of the information he was required to provide by the order of Mann J.[14]On 27 April 2017, BBF1 and Reddy were wound up along with 12 other companies formerly controlled by Mr Gopee. All are now under the control of the Official Receiver. The petition had been presented on 23 July 2015.[15]Mr Gopee has averred that there were further assignments of BFL’s book of loans by way of an assignment of all the assets of BBF1, Reddy and a related company to Mr Gopee personally, on 13 November 2013 and 23 April 2017. No documents were before the court to support this assertion. In any event, any assignment made on 23 April 2017 would post-date the presentation of the winding up petition for BBF1 and Reddy on 23 July 2015.[16]Meanwhile, Mr Gopee faced criminal investigation for his money lending activities, allegedly in breach of the Financial Services and Markets Act 2000 the (“FSMA”) and the Consumer Credit Act 1974 (the “CCA”). On 25 June 2015, Mr Gopee’s assets were frozen under the Proceeds of Crime Act 2002. On 3 March 2016 he was raided by the Financial Conduct Authority (the “FCA”). In April 2016, Mr Gopee was committed to prison for contempt of court in respect of breach of the restraint order. On 26 May 2016, he was disqualified from acting as a company director for 15 years as a result of his conduct as a director of BFL. He was released early by the court in September 2016 but imprisoned again on 30 October 2017 for 15 months. On 9 February 2018, he was sentenced for various FSMA and CCA offences to imprisonment for a period of three and a half years which will begin after the previous contempt of court sentence has been completed in June 2018. As things stand, he is therefore unlikely to be released from prison for some time. After his release, he will be subject to a Serious Crime Prevention Order for five years from his release, forbidding him from conducting any business in the credit sphere.

Conduct of the Hearing

[17]At the hearing, BFL was represented by Mr Oliver Assersohn of counsel, instructed by solicitors on behalf of Mr Coleman, the liquidator, who was also in court.[18]The Official Receiver did not appear on behalf of BBF1 and Reddy, but Mr Peter Joicey was present in court on behalf of the Official Receiver, and helpfully answered questions put to him. As will be apparent from the more detailed discussion below, the Official Receiver’s approach to the proceedings before me was one of neutrality provided that no costs order was sought against BBF1 or Reddy.[19]Mr Gopee was not represented, and was unable to attend in person, being currently incarcerated in HMP Wandsworth. Though he was aware, through correspondence, of the date of the hearing since April 2017, he did not instruct solicitors or counsel to attend on his behalf. In light of that, I asked Mr Assersohn to assist the court with arguments that Mr Gopee may have put had he been present. I am grateful to Mr Assersohn for his help in that regard.

Evidence

[20]I had before me the following witness statements:a. Two witness statements of Mr Coleman as liquidator of BFL, dated 13 June 2014 and 30 January 2018;b. A witness statement of Julie Celia Royle Hunter of the liquidator’s solicitors dated 15 January 2018; andc. A witness statement of Peter Joicey on behalf of the Official Receiver dated 6 February 2018.[21]Also included in the trial bundles were various statements of Mr Gopee, including a statement made pursuant to the Insolvency Act 1986 dated 3 January 2014, a witness statement dated 9 July 2015 and a further statement of 8 March 2017. Mr Assersohn submitted that, in the absence of a hearsay notice or BBF1 or Reddy seeking to call Mr Gopee, his statements were not to be considered in evidence. That would have been the easier course. However, mindful of the comments of the Court of Appeal in this case, and out of an abundance of caution, I read Mr Gopee’s witness statements and took them into account. Where relevant, I refer to them below.

BFL’s Procedural Applications

[22]There were two sets of procedural applications before me which I dealt with at the beginning of the hearing. As indicated above, I determined the applications at the hearing, but said I would give my written reasons for so doing at a later date. I did this out of fairness to Mr Gopee, who was not present, on the basis that this way he would get my reasons more quickly, and without having to pay to have the transcript transcribed: see Mulalley and Company Limited v Regent Building Services Limited and Anor [2017] EWHC 2962 (Ch).[23]BFL made the following procedural applications:a. for permission to continue the claim against BBF1 and Reddy and for the stay of proceedings imposed by section 130 of the Insolvency Act 1986 (the “Insolvency Act”) to be lifted;b. for permission to discontinue its claim against Mr Gopee with no order as to costs; andc. to vary Mann J’s order of 2 February 2017. The last of these was not pressed on the basis that it was no longer necessary.[24]BFL’s application was served on BFF1 and Reddy in the usual way. It was also sent to Mr Gopee at HMP Wandsworth.

Lifting the Statutory Stay

[25]Section 130(2) of the Insolvency Act states:
“When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.”
[26]I was also taken to the corresponding extract of Sealy & Milman: Annotated Guide to the Insolvency Legislation (20th ed), which emphasises that the court in considering whether to lift the statutory stay should seek to do what is right and fair in all the circumstances.[27]As set out above, the Official Receiver has expressed himself “neutral” to this application, so long as no order in relation to costs is made against BBF1 or Reddy.[28]As noted above, Ms Hunter has given evidence in these proceedings. Her witness statement includes a number of reasons for lifting the stay: a) it is necessary to determine which entity currently has any benefit of the relevant loans so that the charges over borrowers’ properties can be discharged, either because the loans are unenforceable, or have been paid off in full. These issues can only be resolved once these proceedings are determined; b) the liquidation of BFL cannot be completed until the fate of the only significant asset in the winding up is known; and c) it is in the interests of the creditors of BFL for the loan book to be recovered.[29]In light of the Official Receiver’s neutrality, and given the importance of the above to a large number of individuals, I have no hesitation in lifting the stay because, in all the circumstances, it is, in my judgment, right and fair to do so.

Discontinuance against Mr Gopee

[30]Mr Assersohn explained to me that Mr Gopee was initially joined to the proceedings because (among other things) BFL required documents from him. Mr Gopee’s documents have since been seized by the FCA, so he no longer has them. He has also lost control of BBF1 and Reddy. BFL therefore no longer requires him to be a party to the proceedings, and no orders are now sought against him personally.[31]BFL could discontinue against Mr Gopee without the court’s permission under CPR 38.2. However, were it to do so, it would need to pay Mr Gopee’s costs to date. The application was made to the court to discontinue with a request that there be no order as to costs.[32]CPR 38.6 provides that the general rule is that a claimant is liable for a defendant’s costs up to the date when notice of discontinuance is served. I see no reason to depart from that general rule in this case. Mr Assersohn urged on me a different conclusion on the basis of the change of circumstances to which, he said, BFL had not contributed - that is, the seizure of Mr Gopee’s papers by the authorities and his imprisonment. Mr Assersohn submitted instead that I should make no order as to costs, but give Mr Gopee liberty to apply for his costs. I do not consider that that is a fair order to make in his absence, or at all. If Mr Gopee has expended costs in defending himself (and only himself) in this action, then he is entitled to those costs, and I so ordered. Costs are to be as agreed, or assessed.[33]It should be clear from the preceding paragraph that Mr Gopee is not entitled to any costs of defending BBF1 or Reddy. As Mr Gopee has represented himself throughout these proceedings, his costs, if any, should be modest.

Mr Gopee’s Applications

[34]It is clear from the court file that Mr Gopee wrote to the court on 19 December 2017 enclosing an application notice. That application notice was never issued by the court, nor served. I made enquiries of the registry, and was told that whilst the application had been received, it had never been actioned. As Mr Gopee had never chased it up, no further action had been taken.[35]In light of that, I thought it best to determine the application, rather than to leave it languishing on the court file. BFL had had notice of the application from correspondence with Mr Gopee, and had obtained a copy from the court file.[36]By his application notice, Mr Gopee sought three orders:a. an extension of time to comply with the order of Mann J to file an Amended Defence;b. vacation of the trial date; andc. an order requiring the FCA to provide Mr Gopee with the seized documents relating to these proceedings, or a copy of those documents.

Extension of Time

[37]Mr Gopee provided brief reasons for requesting an extension of time. He set out that he had been unable to comply with Mann J’s order of 2 February 2017 because:a. he has had to deal with the winding up of BBF1 and Reddy (and, I add, the 12 other companies now in the hands of the Official Receiver);b. he has no access to funds because his assets are frozen by the restraint order;c. he has been “under tremendous stress and unable to cope with anything especially the large volume of litigation”;d. he has had to seek medical advice, and has been taking tranquilisers;e. the FCA has his documents in the case; andf. he is in prison.[38]Mr Gopee’s Amended Defence was due in early March 2017. He is therefore over 11 months late. The various medical certificates he provided cover part, but by no means a major part, of that time. He was also not imprisoned until well after the deadline for his Amended Defence.[39]However, out of fairness to him, and mindful of the Court of Appeal’s comments in this case, I allowed the extension request, and received his very late filed Amended Defence.[40]Since the winding up of BBF1 and Reddy, Mr Gopee is no longer in a position to instruct on behalf of those entities. So the Amended Defence I allowed him to file late relates only to him personally, and not to those other entities. Also, as set out above, he is no longer a party to the action, but he should be able to recover his costs of preparing the Amended Defence, if any.

Postponement of the Trial Date

[41]The hearing of BFL’s substantive application was listed on 6 April 2017, and notified to Mr Gopee the next day. He has had ample time to prepare for it, albeit he has had numerous legal and other proceedings with which to deal.[42]At the hearing, I declined to postpone the hearing, for the following reasons which I now set out:a. as mentioned at the start of this judgment, there are many people waiting on the outcome of this litigation. It is therefore in the general public interest that the matter be determined now;b. Mr Gopee is no longer in control of BBF1 or Reddy, and is no longer a party to these proceedings, following my earlier order above. There is therefore no requirement for his presence;c. In any event, Mr Gopee has already set out his position in detail - to Mr Halpern, to the Court of Appeal, and, since then, in his Amended Defence. His position is well known;d. Further, the evidence before me was that, as things stand, Mr Gopee will not be released from prison for some years (although I note that he himself gave no evidence beyond his current sentence for contempt of court). It would not be appropriate to delay these proceedings for a number of years, particularly given the factors I have set out above.[43]For these reasons, I declined to grant Mr Gopee’s request for an adjournment.

Order against the FCA

[44]Mr Gopee sought through these proceedings documents seized by the FCA in other proceedings. That is not the right way to go about it. If Mr Gopee wants those documents back, he should apply to the FCA for them, or apply in those proceedings. I therefore declined to make any order against the FCA.[45]No costs were sought in relation to Mr Gopee’s application.

BFL’s Substantive Application

[46]By its application dated 15 December 2014, BFL sought an order that the Deed be set aside:a. pursuant to section 127 of the Insolvency Act as a disposition made after the commencement of the winding up;b. pursuant to section 238(3) of the Insolvency Act on the basis that the Deed amounts to a transaction at an undervalue pursuant to section 238(4) of the Insolvency Act;c. pursuant to section 239(3) of the Insolvency Act on the basis that the Deed amounts to a preference pursuant to section 239(4) of the Insolvency Act; and/ord. pursuant to section 423(2) of the Insolvency Act on the basis that the Deed amounts to a transaction to defraud creditors pursuant to section 423 of the Insolvency Act.[47]In addition, BFL sought several consequential orders, including: a monetary trace on the accounts of BFF1 and Reddy; for those entities to provide certain information; a declaration that the transfer of any charge transferred from BFL is void; and orders for rectification of the Land Registry. No damages or costs were sought.[48]Whilst BFL’s application has already been determined by Mr Halpern, the Court of Appeal set that judgment aside and remitted the matter to another judge of the High Court for determination. This is therefore a hearing de novo, as if the hearing before Mr Halpern had not taken place. Mr Assersohn (who did not appear before Mr Halpern or the Court of Appeal) took me to passages of the Court of Appeal’s judgment and so I comment on that as necessary below.[49]BFL’s claim under section 293 of the Insolvency Act, which had been pursued before Mr Halpern, was not pursued before me.

Court of Appeal

[50]Mr Assersohn submitted that the Court of Appeal expressed two primary concerns with the conduct of the hearing before Mr Halpern:a. that the allegation of backdating of the Deed had not been expressly pleaded; andb. that Mr Gopee was not given an opportunity to respond, either through his witness statement (which Mr Halpern did not admit into evidence) or by being asked questions in the witness box.[51]Mr Assersohn submitted that, importantly, a number of facts have changed since the Court of Appeal’s judgment:a. BFF1 and Reddy have been wound up, and are now under the control of the Official Receiver, and not Mr Gopee. As set out above, the Official Receiver is neutral as to BFL’s application - this is a significant change from when Mr Gopee controlled those entities and opposed BFL’s application. BFF1 and Reddy have not filed an Amended Defence to respond to the Amended Particulars of Claim filed with the permission of Mann J. In that respect, BFL’s application is now in effect undefended;b. The proceedings against Mr Gopee have been discontinued;c. The Official Receiver has filed a witness statement, helpfully setting out the fruits of a partial review of the many documents in his possession relating to the dispute;d. Mr Gopee was given an opportunity under the order of Mann J to set out in full the background to the Deed but has failed to do so fully; ande. BFL has filed Amended Particulars of Claim which plead more fully the allegation that the Deed had been backdated.

Amended Particulars of Claim

[52]The relevant paragraphs of the Amended Particulars of Claim dealing with the allegation that the Deed was back dated read as follows (omitting footnotes):
“BFL relies on the following reasons: 20.1 No evidence extraneous to the Deed of Assignment has been adduced which establishes the existence of the document before the presentation of the winding up petition and if the Deed of Assignment was genuine there would be convincing evidence of the same; 20.2 [Mr Gopee] made attempts on behalf of [BFL] to enforce the loans after the date of the purported assignment; 20.3 [Mr Gopee] signed witness statements on 20 June 2012 and 27 July 2012 in answer to the winding-up petition alleging that the petitioner was in fact indebted to [BFL]. The evidence is inconsistent with the assertion that the [BFL]’s debts were transferred on 31st March 2012 alternatively was not a complete statement of the position (e.g. if the reason for asserting that the money was owed to [BFL] was because the assignment had not been communicated to the debtors (and this explanation is not accepted) that was not explained in the witness statement or anywhere else); 20.4 [Mr Gopee] was asked to explain the point (above) by Mr. D Halpern QC. [Mr Gopee] said it was a "mistake" and [BFL] avers that that explanation is not credible given that the whole purpose of the witness statements referred to in the preceding sub-paragraph was to show that the petitioner was a debtor and not a creditor of [BFL]; 20.5 The earliest which any of the mortgage transfers were registered at the Land Registry was 17 September 2012 and absent a convincing explanation it is unlikely the purported assignees would have agreed to wait for 6 months before registering the transfers; 20.6 Mr. Kelly obtained a mortgage from KMC in respect of his property at 18 Dale Park, London SE19 3TY and obtained a further loan from [BFL]. [BFL] lodged a unilateral notice to protect its loan ahead of KMC's registered charge. [BFL] obtained judgment against Mr. Kelly for £205,378 in 2011 but it appears from the Land Registry that the transfer of the benefit of the unilateral notice from the [BFL] to the [Mr Gopee] was not made until 12 October·2012 which is after [BFL] had been wound up. The application to transfer the benefit of the unilateral notice (the "UN3" form) supports [BFL]’s contention as to the true date of the Deed of Assignment in that: 20.6.1 The UN3 was completed by [Mr Gopee] and signed by him; 20.6.2 [Mr Gopee] can have been in no doubt as to the importance of accurately completing the form because of the circumstances (see above) and the words of the UN3. The UN3 states: "WARNING If you dishonestly enter information or make a statement you know is, or might be, untrue or misleading, and intend by doing so to make a gain for yourself or another person, or to cause loss or the risk of loss to another person, you may commit the offence of fraud... the maximum penalty for which is 10 years' imprisonment or an unlimited fine, or both. Failure to complete this form with proper care may result in a loss of protection under the Land Registration Act 2002 if, as a result a mistake is made on the register". 20.6.3 Question 11 of the UN3 asked: "Give details of how the applicant has become entitled to the interest protected by the notice (for example, as the result of a transfer, statutory vesting etc.)” 20.6.4 The response to the question included the phrase: "By a transfer of a portfolio of charges dated 17/9/12 and assignment of all debts due and owing under the charge of the same date made between [BFL and BBF1] and [BBF1 and Reddy]..” 20.6.5 The words "of the same date" refer to the assignment which is expressly said to be dated 17 September 2012 and there is no reference to the 31st March date contained in the purported [Deed]; 20.6.6 The "assignment" of 17 September 2012 has not been produced by [BBF1, Reddy and Mr Gopee]; 20.6.7 There is no apparent good reason to delay the transfer by almost 6 months given that a winding up petition was presented in May 2012; 20.7 The fact that the assignment was made to entities in respect of which [Mr Gopee] was (in effect) the controlling mind and the absence of a number of matters which one would expect to see in a genuine document of this kind, such as (but not limited to): 20.7.1 Dates next to the various signatures of [Mr Gopee] and/or of his daughter (the purported witness to the document); 20.7.2 An attempt to identify and/or value the loans which were said to be the subject of the assignment as at the time of the Deed of Assignment.”
[53]BFL alleges that the Deed transferring the book of loans out of BFL to BBF1 and Reddy was not made on 31 March 2012 as put forward by Mr Gopee, but rather was made at some point in September 2012, after notification of the liquidation. If in fact it was made after the notification of the liquidation, then BFL submits that it is void under section 127 of the Insolvency Act unless the court orders otherwise.

No Evidence of Existence of Deed Prior to September 2012

[54]As set out above, paragraph 20.1 of the Amended Particulars of Claim alleges that, other than the Deed itself, there is no contemporaneous document which establishes the existence of the Deed before the presentation of the winding up petition.[55]In a detailed and helpful witness statement, Mr Joicey for the Official Receiver confirmed that he had been through many of the 39,000 documents provided by the FCA to the Official Receiver in respect of the 14 companies in liquidation. Mr Joicey’s witness statement indicates that there are no contemporaneous documents prior to 17 September 2012 that mention the Deed.[56]Mr Coleman has also given evidence that he has found no document which suggests that the Deed was made prior to 17 September 2012.[57]No evidence was tendered by BBF1 or Reddy. Mr Gopee in his Amended Defence referred to cheques paid to DLA Piper UK LLP. However, these cheques, BFL says, could have been for anything, and there is no indication that they relate to the Deed.

Post-31 March 2012 Attempts to Enforce

[58]Paragraph 20.2 of the Amended Particulars of Claim alleges that attempts were made by BFL to enforce the loans subject to the Deed, after 31 March 2012. The following examples come from Mr Coleman’s and Mr Joicey’s witness statements:a. on 16 and 27 April 2012, BFL wrote on headed paper to DLA Piper UK LLP, solicitors for KMC, in relation to the property at Dale Park Road;b. on 25 May 2012, BFL wrote on headed paper to the tenant/s and/or occupier/s of 25 Knebworth House Londesborough Road, London N16 8RL, a property owned by Mr Timothy Makanju, who had borrowed £6,500 plus fees from BFL. That letter sought vacation of the premises by a purported eviction date of 25 June 2012;c. on 20 July 2012, BFL wrote on headed paper to Ms C Adedoyin, who had borrowed under £20,000 from BFL in 2008 and 2009, stating that BFL had obtained an order for possession and intended to issue a warrant for eviction; andd. on 21 July 2012, BFL wrote to another borrower, Mr Felix Kubi. Mr Kubi had borrowed £1,750 from BFL in 2009, in consideration for which BFL had been granted a legal charge over Mr Kubi’s property in Croydon. The document sent by BFL shows monthly interest accruing on the 21st of each month, including April, May, June and July in 2012, such that the amount owned by Mr Kubi totalled £6,326.68 by that time. The document requested full payment by return, and threatened re-possession of Mr Kubi’s home.[59]Mr Assersohn submitted that BFL’s purporting to deal with these loans after 31 March 2012 is inconsistent with the position that the book of loans had, by that date, already been assigned to BBF1 and Reddy. BBF1 and Reddy offered no evidence in response. Mr Gopee’s Amended Defence does not attempt to explain these obvious inconsistencies with his position, other than to suggest that BFL was acting as agent of BBF1 and Reddy.

Witness Statements by Mr Gopee

[60]Paragraphs 20.3 and 20.4 of the Amended Particulars of Claim plead that Mr Gopee signed witness statements on 20 June 2012 and 27 July 2012 giving evidence inconsistent with the Deed, by stating that Mr and Mrs Mayendesa were in fact indebted to BFL, rather than creditors. If the Deed had had effect, Mr and Mrs Mayendesa would in fact have been indebted to BBF1 and/or Reddy.[61]Again, BBF1 and Reddy offered no evidence in response. Mr Gopee’s position on this has changed. Before Mr Halpern, he suggested it was a mistake. In his Amended Defence, no reference is made to the mistake - rather he now says that BFL was operating as an agent or under a power of attorney. Mr Gopee has adduced no document to back up his late assertion.[62]The Court of Appeal dealt with this point at paragraph 45(i) of its judgment. The Court of Appeal recognised that Mr Gopee’s witness statements were “not a statement of the complete position” and that “on one view, it is a point against [BBF1, Reddy and Mr Gopee’s] case.”

Registration at the Land Registry

[63]Paragraph 20.5 of the Amended Particulars of Claim pleads that no convincing explanation has been given for the almost 6-month delay in registering the mortgage transfers between 31 March 2012 and 17 September 2012. Rather, Mr Assersohn said that Mr Gopee knew from 9 May 2012 that a petition had been made to wind up BFL, and that Mr Gopee moved to remove the only significant asset from BFL, to his own benefit, before BFL could be wound up.[64]BBF1 and Reddy offered no evidence to rebut this version of events. Mr Gopee’s Amended Defence records “It is sufficient to allow the protection to be continued in the name of [BFL] with devolution of title to be annexed to any disposition by the transferee at a later time even after several years.” Whilst this may be true, Mr Assersohn said, it does not explain the delay, nor why action was taken on the date it was (2 days before the winding up order). Mr Gopee has offered no explanation for the delay other than to say it was permissible.[65]The Court of Appeal dealt with this at paragraph 45(ii) of its judgment:
“Again, one can see why necessarily Mr Gopee might well have wished to have waited to see what happened to the winding up petition against [BFL], before committing himself to the expense and bother of a formal transfer of the mortgages themselves. Again,… on one view, this was a point against [BBF1, Reddy and Mr Gopee’s] case.”

Mr Kelly’s Property - Dale Park Road

[66]As noted above, BFL was in litigation concerning the property at Dale Park Road formerly owned by Mr Kelly. BFL lodged a unilateral notice to protect its loan ahead of a registered charge in favour of another lender, KMC. BFL obtained judgment against Mr Kelly for £205,378 in 2011, but the transfer of the benefit of the unilateral notice (referred to in these proceedings as the UN3 form) was not made until 12 October 2012, after the date of the winding up order. The UN3 form was completed by Mr Gopee and signed by him. That form includes strong warnings about the need for truthfulness. In response to the question “Give details of how the applicant has become entitled to the interest protected by the notice (for example, as the result of a transfer, statutory vesting etc)” Mr Gopee answered “By a transfer of a portfolio of charges dated 17/9/12 and assignment of all debts due and owing under the charge of the same date made between [BFL and BBF1] and [BFL and BBF1 and Reddy].”[67]Mr Assersohn pointed out that there is no mention of the 31 March 2012 date in the UN3 form - indeed, the assignment is expressly said to be “of the same date.” No evidence of another “assignment” of 17 September 2012 has been adduced.[68]BBF1 and Reddy offered no evidence in response. Mr Gopee again explained in his Amended Defence that a delay in registering an assignment is permitted, but, he did not explain either the delay in this case, nor the use of the words he wrote on the UN3.[69]Further, on or about 17 September 2017, two template letters in PDF format appear to have been created. The first of these, on BBF letterhead, is dated 17 September 2017, and states as follows:
“We write to inform you that on this day the above Charge together with all moneys due and owing by you under the above Charge were assigned and transferred absolutely to [BBF1] and [Reddy]. This also includes any judgment debt (if applicable) and any ongoing proceedings in which the Transferee/Assignee shall continue in their own right to pursue the claim and recover the debt where proceedings have already commenced and or enforce same until such time as the Transferee/Assignee are substituted in the Claimant’s place.”
[70]The template contained a number of gaps to be filled in by hand. At the bottom of the template was a space to fill in the date on which the template letter was served.[71]The second template letter is in a similar format, but on the letterhead of BBF1. It is not dated, but has a gap for the date to be filled in. It reads:
“We write to inform you that on the 17th September 2012 the above Charge together with all moneys due and owing by you under the above charge were assigned and transferred absolutely to [BBF1] and [Reddy]. …

We enclose a signed notice of assignment issued by [BFL] for your record.”

We enclose a signed notice of assignment issued by [BFL] for your record.”[72]Mr Joicey helpfully provided some 35 examples of completed notices. In each example, the blanks in the template have been completed by hand. Whilst the BFL notices are all dated 17 September 2012, the BBF1 notices are dated at the earliest on 25 October 2012 and at the latest on 28 November 2013. The majority of these notices, Mr Joicey said, were sent in March 2013.[73]Mr Assersohn submitted that these documents, on their face, are clear in their implication. The 17 September 2012 BFL pro forma refers to the charge being assigned “on this day”, a clear reference to the date of the document, and not to any other date. Further, the BBF1 pro forma, on its terms, refers to 17 September 2012 as the date of the assignment/transfer. Neither document refers to 31 March 2012.

Dates and Valuations

[74]Paragraph 20.7 of BFL’s Amended Particulars of Claim sets out two further factors which, it is alleged, suggest that the date on the deed is not correct:a. there are no dates next to the signatures on the Deed of Mr Gopee or his daughter; andb. there was no attempt to identify and/or value the loans which were said to be the subject of the Deed.[75]Again, BBF1 and Reddy offered no response. Mr Gopee’s Amended Defence repeats various paragraphs from the Deed, and submits “it is not the normal practice to put a date after each and every signature. The value and full details of the loans are as stated in the loan books, copies of which have already been provided to [BFL].”

Discussion

[76]As will be clear from the above, BFL has adduced cogent reasons that suggest that the Deed was not made on 31 March 2012. Mr Joicey concluded “[i]n summary, there is no document I have seen that suggests the Deed of Assignment was made, relied or acted upon before September 2012.”[77]Against this, it seems to me that the only evidence supporting a March 2012 date for the creation of the Deed is the date on the document itself.[78]Mann J’s order set out in detail the information Mr Gopee was expected to provide. Mr Gopee provided what Mr Assersohn described as a partial response by a witness statement of 8 March 2017. For completeness, I set out below Mr Gopee’s responses to the questions approved by Mann J. Information requested in order Mr Gopee’s response(a) The precise circumstances of when, where and how the Deed was drawn up; “The circumstances which led to the deed being drawn was the payment that became due to Kensington Mortgage Company following the unsuccessful appeal in the Court of Appeal. I am unable to provide any more information until I receive copies of the documents from the FCA.”(b) Who drafted the Deed and if a third party when were they instructed to do so (assuming disclosure is not protected by privilege, the instructions that the third party was given); “I am the person who drafted the deed.”(c) The full name and contact details for the witness to the Deed; “To the best of my knowledge I think it was my daughter Rochelle Gopee of 7 Brightwell Avenue, Westcliff on Sea SS0 9EB who would have witnessed my signature. I shall be able to confirm it once I have been provided with a paper copy of my documents by the FCA.” (d)How the Deed was sent and/or communicated to the purported assignees and the valuation placed on the loan debt in the year end accounts for 2012; “The deed was not physically sent between the parties. As I was the director handling the affairs of all the three parties involved I dealt with it in a disciplined and accurate way ensuring that the consideration being paid for the assignment was sufficient. The valuation which I relied upon was the same that had been the value of the book debts continuing from the previous years which was not greatly different for the ending May 2012.” (e)The officers (or equivalent), owners and those with a beneficial interest in Societe Gopee Freres De Saint Pierre. “To the best of my knowledge I recall being the sole Trustee of Societe Gopee Freres De Saint Pierre at one time. I am unable to confirm this at present until I receive a copy of same from the FCA.”[79]Mr Gopee was not called by any party. He was therefore not cross-examined. No party sought to rely on his evidence. It was therefore open to me to ignore it. In the absence of Mr Gopee’s evidence, the case that the Deed has been back-dated is, in my judgment, overwhelming.[80]However, in light of the Court of Appeal’s judgment, I did take Mr Gopee’s position into account, but I do not consider, in all the circumstances, that it establishes that the Deed was made on the date it bears. Having reviewed the documentary evidence now provided by the Official Receiver, I find that the Deed was made on or about 17 September 2012. That is the only position consistent with other documents created by BFL, BBF1 and Reddy when they were under Mr Gopee’s control. I accept the reasons put forward by Mr Assersohn:a. Given the large number of documents, and the large number of debtors, one would have expected other documents that reference the Deed to emerge within the first 6 months of its alleged existence. As Mr Coleman and Mr Joicey have now confirmed in written statements, no such documents exist;b. There are also a number of documents which are inconsistent with the existence of the Deed from March 2012. These include Mr Gopee’s witness statements, and various letters sent on BFL letter headed paper. Their existence is more consistent with BFL’s position than with the explanation put forward by Mr Gopee;c. Whilst I readily accept that there may be reason for not actioning recordals of the transfers at the land registry, Mr Gopee has never himself said why he waited. He may have been entitled to wait, but he has not explained why, in circumstances where an explanation is called for and has been requested; andd. There are documents, including the BFL pro formas, which, on their terms, state that the assignments were made on 17 September 2012 (“on this day”).[81]Again, I am mindful of the Court of Appeal’s comment at paragraph 46 of its judgment:
“In my view because, as the reported judgments against him and his companies make clear (some of which I have been involved in refusing permission to appeal to Mr Gopee and his companies), Mr Gopee has had, to put it mildly, somewhat of a chequered career in the courts in relation to his conduct of [BFL] and his other associated money lending companies, the judge mistakenly found it all to easy to infer fraud against Mr Gopee and [BFF1 and Reddy].”
[82]Although Mr Gopee is no longer a party to these proceedings, and was not called by the only two defendants, BBF1 or Reddy, to give evidence, I have taken into account his witness statements and pleadings, as well as the arguments he has made as recorded in Mr Halpern’s judgment and that of the Court of Appeal. I have done my best fairly to evaluate the material provided by Mr Gopee. But in light of the detailed witness statement now provided by the Official Receiver, I have come to the conclusion that Mr Gopee’s position is not to be preferred. In making this finding, I am making only a finding in these proceedings to the civil standard of proof - that is, I have found, on the balance of probabilities, that I prefer the version of events put forward by BFL. I am not making any findings to the criminal standard (that is, beyond all reasonable doubt).

Section 127 of the Insolvency Act

[83]Section 127 of the Insolvency Act provides:
“127. Avoidance of property dispositions, etc. (1) In a winding up by the court, any disposition of the company's property, and any transfer of shares, or alteration in the status of the company's members, made after the commencement of the winding up is, unless the court otherwise orders, void. (2) This section has no effect in respect of anything done by an administrator of a company while a winding-up petition is suspended under paragraph 40 of Schedule B1.”
[84]In light of my finding that the Deed was in fact made on or about 17 September 2012, I also find that the Deed was created on a date after the presentation of the winding up petition, and is therefore void.[85]Given my findings, it is not strictly necessary to consider BFL’s other grounds for invalidating the Deed. However, as this matter may go further, I have set out my findings briefly below.

Section 238(2) of the Insolvency Act

[86]Sections 238(2) - (5) of the Insolvency Act provide:
“(2) Where the company has at a relevant time (defined in section 240) entered into a transaction with any person at an undervalue, the office-holder may apply to the court for an order under this section. (3) Subject as follows, the court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction. (4) For the purposes of this section and section 241, a company enters into a transaction with a person at an undervalue if— (a) the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration, or (b) the company enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company. (5) The court shall not make an order under this section in respect of a transaction at an undervalue if it is satisfied— (a) that the company which entered into the transaction did so in good faith and for the purpose of carrying on its business, and (b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.” (a) the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration, or (b) the company enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company. (a) that the company which entered into the transaction did so in good faith and for the purpose of carrying on its business, and (b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.”
[87]BFL submits that the transaction in the Deed was at an undervalue. BBF1 and Reddy paid £76,500 for the transaction; BFL submits that its book of loans was worth considerably more than that.[88]Mr Coleman has calculated the book value of the loans to be £612,005. This was put to the defendants pursuant to the order of Mann J, with a requirement that the defendants indicate whether, and to what extent, they disputed the facts set out in the schedule. Whilst the schedule was provided in accordance with Mann J’s order, no response has ever been received, despite having been required by March 2017 under the judge’s order.[89]Further, BFL avers that the disposition was not made in good faith; was not one that was in the ordinary course or for the purpose of carrying on its business; and at the time the Deed was made there were no grounds for believing that the transaction would benefit BFL.[90]The Official Receiver’s position is neutral.[91]Mr Gopee, in his Amended Defence, submits that the figure is accurate, because the majority of the loans are now unenforceable, having been illegally made. Whilst that may now be true, it is a statement inconsistent with what Mr Gopee was doing at the time; he was actively attempting to enforce the loans by evicting people from their houses. What matters is what the position was on, as I have found, 17 September 2012. I have, for completeness, also considered the position as it was at 31 March 2012, in case my assessment of the date of the Deed is found to be wrong. Whilst there will obviously be minor differences in the value of the book of loans between those two dates (for example, interest accrued and loan repayments were made), in my judgment, there was no substantial occurrence during that time that would significantly alter the value of book of loans. It is therefore convenient to consider the two dates together.[92]It is also difficult for me to take into account Mr Assersohn’s argument that in January 2018 Mr Coleman accepted in settlement of a dispute with Mr Kelly the sum of £124,279.05, which is more than the transaction’s stated value. This falls at the same hurdle as Mr Gopee’s reliance on the illegality of some of the loans. However, where the argument in relation to Mr Kelly does succeed is that, by Mr Gopee’s own evidence, there was a judgment debt of at least £205,378 in favour of BFL, and this had a book value, at least, far in excess of the value of the Deed.[93]The Court of Appeal made three comments in relation to this aspect of the case before Mr Halpern:a. the Court of Appeal noted that Mr Halpern had failed properly to take into account the evidence from BBF1, Reddy and Mr Gopee that the debt was unrecoverable. As it has now turned out, BFL has recovered £124,279.05 of the debt;b. the Court of Appeal noted that Mr Gopee had been unable to access the schedule of debts provided in Excel format, because he was not sufficiently computer literate. The Court of Appeal noted that this “proffered reason may have been disingenuous.” In any event, I was told by Mr Assersohn on instructions that Mr Gopee was provided in early 2017 with a paper copy of an updated schedule pursuant to the order of Mann J, and so this issue no longer remains. In breach of the order of Mann J, Mr Gopee has not responded to that schedule; andc. the Court of Appeal noted that Mr Halpern had not considered Mr Gopee’s position that some of the debts were unenforceable. I have considered that position, as well as the documentary evidence now provided by Mr Coleman and Mr Joicey that BFL, on its own letterhead, continued to enforce the debts after 31 March 2012, and that Mr Gopee was still attempting to enforce the debts in his own name as late as 2017.[94]In my judgment, at both 31 March 2012 and 17 September 2012, the value of the book of loans was considerably higher than £76,500. At the time, BFL was pursuing Mr Kelly for over £200,000 in relation to the property on Dale Park Road. Efforts were being made to enforce the other loans, including by attempting to evict people from their houses (see, for example, the property at 25 Knebworth House Londesborough Road, London N16 8RL, referred to above, where eviction was threatened in May 2012). In my judgment, there was no genuine commercial rationale for the Deed nor were there reasonable grounds for believing it would benefit BFL. In my judgment, it was made at an undervalue.

Section 423 of the Insolvency Act

[95]Further and in the alternative, BFL avers that the deed was a transaction entered into for the purposes of putting assets beyond reach of a person who is making or may make a claim against BFL or otherwise prejudice the interests of such a person in relation to the claim. BFL asserts that BBF1, Reddy and Mr Gopee were aware of the significant costs award achieved by Mr and Mrs Mayendesa against BFL, and that the Deed was an attempt to put assets beyond the reach of Mr and Mrs Mayendesa.[96]Section 423 of the Insolvency Act provides:(a) he makes a gift to the other person or he otherwise enters into a transaction with the other on terms that provide for him to receive no consideration;(b) he enters into a transaction with the other in consideration of marriage or the formation of a civil partnership; or(c) he enters into a transaction with the other for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by himself. (a) restoring the position to what it would have been if the transaction had not been entered into, and (b) protecting the interests of persons who are victims of the transaction. (a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make.[97]BFF1 and Reddy offer no defence to this allegation. Mr Gopee’s Amended Defence simply states that the allegations are denied.[98]I have found above that the Deed was at an undervalue, and hence section 423(1)(c) is satisfied. Additionally, I am satisfied that the Deed was entered into for the purpose of putting assets beyond the reach of Mr and Mrs Mayendesa, or, in the alternative, creditors of BFL. I can find in the papers no other reasonable explanation for the transfer of the book of loans from one corporate entity to another controlled by Mr Gopee, and he has offered no explanation for doing so. Again, I stress that this is a finding on the balance of probabilities: on the basis of the evidence before me, I prefer the explanation given by BFL to the broad denial given by Mr Gopee.[99]Given my findings, I am also satisfied that I should make the other orders sought by BFL.

Conclusions

[100]In my judgment: a) the Deed entered into between BFL and BBF1 and Reddy was not entered into until on or around 17 September 2012; b) it therefore post-dates the presentation of the winding up petition for BFL, and is therefore void pursuant to section 127 of the Insolvency Act and should be set aside; c) it is also void for being a transaction at undervalue pursuant to section 238(4) of the Insolvency Act and should be set aside; d) it is also void for being a transaction to defraud creditors pursuant to section 423 of the Insolvency Act and should be set aside; e) within 14 days of a written request by BFL, BBF1 and Reddy shall provide whatever information, documents and records are in the possession of the Official Receiver in respect of borrowers which were purportedly assigned pursuant to the Deed.[101]I also declare that the transfer since 31 March 2012 of any charge transferred from BFL at Her Majesty’s Land Registry to BBF1, Reddy or Mr Gopee or any other company controlled by Mr Gopee or any of them is void in accordance with section 127 of the Insolvency Act and I order that BFL be reinstated as the chargeholder.[102]I further order that the register of Her Majesty’s Land Registry be rectified to reinstate BFL as the registered holder of the charges in respect of the loans purported to have been assigned under the Deed, and the removal of any charges or notices registered in favour of BBF1 and/or Reddy or any subsequent purported assignees.[103]As requested by the Official Receiver, and agreed to by BFL, there shall be no order as to costs.