Moloobhoy & Anor v Kanani [2012] EWHC 1670 (Comm)

Case No. 2011 Folio 1260

[2012] EWHC 1670 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Venue Royal Courts of Justice, Strand, London WC2A 2LL

Date 19 June 2012

Before

STEPHEN MALES QC

(sitting as a Deputy High Court Judge)

Between

Rishad Moloobhoy (Mr)Claimant

Shenaz Begum Moloobhoy (Mrs)Claimant

Shams Mohamed Kanani (Mr)Defendant

Richard Mawrey QC

(instructed by Duval Vassiliades) for Claimants

Rachel Sleeman

(instructed by B P Collins LLP) for Defendant

Hearing Hearing date: 13 June 2012

Judgment

Stephen Males QC:

[1]There are two applications before the court. The first is an application by the defendant seeking to set aside service of the Claim Form and accompanying Particulars of Claim upon him and for a declaration that the English court has no jurisdiction, or should not exercise jurisdiction, over the claim. The second is an application by the claimants for summary judgment.

[2]On 21 December 2011 Gloster J directed that both applications should be listed together, and that it would be for the judge hearing the applications to decide in which order to hear them and whether it is appropriate to hear the summary judgment application. She made clear that the parties should prepare for an effective hearing of both applications.

[3]Despite the terms of Gloster J’s direction, the evidence served by the defendant does not indicate that there is any defence to the claim, but challenges the exercise of jurisdiction over him on two grounds. The first is that the proceedings have not been properly served upon him. The second is that jurisdiction should not be exercised on forum non conveniens grounds.

[4]In these circumstances the following issues arise, which are best addressed in this

[5]Before proceeding to these issues, it is necessary to introduce the parties and to explain briefly the nature of the claimants' claim. The account given below is substantially taken from the claimants’ evidence, but except where indicated has not been challenged by the defendant, and is supported where indicated by the documents which are in evidence.

[6]The claimants are husband and wife, and both are British citizens. The first claimant, Mr. Rishad Moloobhoy, is (or was in December 2011) aged 59 and a trader in steels and bitumen, in which business he has been involved for much of his life. Until late 2005 the claimants' permanent residence was at an address in Northwood. Since late 2005, when they moved to Dubai, they have divided their time between Dubai and London and, when in London, live at an address in Cambridge Square.

[7]The defendant, aged 62 in December 2011, is an accountant and businessman of Kenyan nationality, but with rights of residence in the United Arab Emirates and the United Kingdom. He is distantly related to the second claimant, Mrs. Moloobhoy. At one time the defendant had his principal home in this country, but the claimants accept that he has since at least June 2001 had his primary residence in Dubai, living at a rented apartment with his wife and his wife’s elderly mother. However, it is common ground that the defendant and his wife also own a substantial house in Pinner in north London at which they spend at least some time each year. I consider the evidence regarding the nature of the defendant’s use and occupation of this house below, the issue being whether it constitutes his usual residence.

[8]In outline the claimants’ claim in this action is for an account, together with associated relief, so as to enable them to recover, pursuant to an oral partnership agreement, what is said to be their share of the proceeds of the sale of property in Dubai, the sale of which was handled by the defendant.

[9]In November 2002 the second claimant purchased a plot of land at Emirates Hills in Dubai known as Plot E146. The land was purchased in the second claimant’s name for tax reasons, but the first claimant acted for her in connection with the purchase and in the subsequent transactions referred to below. At that time the claimants contemplated building a home on this land, although in the event this did not happen and they treated the land as an investment. At about the same time, the defendant and his wife purchased a second plot of land, known as Plot E148.

[10]It was decided that Plot E146 would be transferred into the ownership of a BVI company. Apparently for tax reasons it could be beneficial for a purchaser then to acquire the company rather than the land itself. Accordingly the claimants incorporated a BVI company called Jackinson Equities Ltd (“Jackinson”), of which the second claimant became the sole shareholder. The second claimant and the defendant became the directors of the company. Plot E146 was then transferred into the ownership of Jackinson. A similar structure was also adopted for Plot E148.

[11]According to the claimants, there was a meeting between the first claimant (acting on behalf of his wife and himself) and the defendant in London in about early 2005 at which an oral partnership agreement was concluded for the exploitation of the two plots in Dubai, the key terms of which were as follows:a. the two plots would be sold, either before or after development;

b. the net proceeds (after deduction of any development costs, conveyancing and legal fees and other expenses) would be shared equally between the claimants on the one hand and the defendant and his wife on the other;

c. the defendant (who spent a lot of time in Dubai and who had already found a potential purchaser for Plot E146, a Mr. Jajodia), would handle the development (if applicable) and sale of both plots; and

d. the defendant would keep the claimants fully informed and would not make any significant decision about the development and sale of the plots without consulting them.

[12]The defendant appears to deny that this meeting took place in London, and that any such agreement was reached with the first claimant, but his witness statement also refers to "the agreement between the parties”, and therefore appears to accept at any rate that some such agreement was reached at or about this time. The defendant suggests also that the claimants’ evidence about this meeting is “extremely vague”, in particular because the claimants are unable to be more precise about the date of the meeting, but I do not accept this criticism. On the contrary, the claimants’ evidence about the content of the meeting seems rather precise, while it is not at all surprising that the claimants cannot pinpoint the date when it took place.

[13]In or about April 2005 the first claimant fell seriously ill. He only returned to relatively good health in about March 2006. Because he would be unable to deal with business matters during this period of illness, it was agreed that the second claimant would give the defendant a power of attorney and a stock transfer form signed in blank to enable him to deal with her shareholding in Jackinson in order to complete the proposed sale of Plot E146 (or, if appropriate, of her shares in Jackinson) to Mr. Jajodia. In the event, however, the sale to Mr. Jajodia did not go ahead.

[14]However, Plot E148 was sold (or, strictly, the shares in the company which owned Plot E148 were sold), without being developed. The claimants say that they were given very little information about the sale, but they acknowledge (and indeed rely upon the fact as confirming the existence of the agreement which they say was reached) that the defendant paid them AED 4 million which represented their share of the net proceeds of sale.

[15]Towards the end of 2006 or possibly in early 2007 the defendant informed the first claimant that although he did not have a buyer for Plot E146, he had decided to develop the land and had entered into a joint venture with a property developer. The claimants were content with this arrangement at this stage despite the lack of detail provided.

[16]On 7 February 2007 the defendant sent an email to the first claimant, which the first claimant says (and which the content of the e-mail appears to bear out) was sent in response to a request for a written record of the agreement reached between the parties. So far as Plot E146 was concerned, it read as follows:

“3. The beneficial ownership of freehold plot E146 at Emirates Hills, Dubai, owned by Jackinson Equities Limited is owned by Rishad Moloobhoy and myself jointly and equally. 4. Jackinson Equities Limited has entered into a joint venture agreement with a Mr. Ahmed Jahuber Kamal, an Indian citizen and a resident of the UAE, to develop and build a substantial residence on the plot E146 to be completed by 31 October 2007. The profits on the joint venture are to be divided equally between Jackinson Equities Limited and Mr. A J Kamal. The profits earned by Jackinson Equities Limited will be shared equally between Rishad Moloobhoy and myself. The above e-mail is just a temporary memo for the personal satisfaction of Mr. Rishad Moloobhoy as we have nothing in writing so far. This memo will however be translated into a proper Memorandum of Understanding. However, until such a MOU is prepared, this memo by e-mail will remain a legally binding document upon my heirs, executives, administrators, assignees and nominees.”

[17]It also referred to the similar arrangement concerning Plot E148.

[18]Although the claimants say that this document contained a number of errors, they rely upon it as confirming (as it clearly does) the parties' agreement that the net proceeds of sale of the two properties should be shared equally between the claimants on the one hand and the defendant and his wife on the other.

[19]In early 2008 the defendant informed the first claimant that he had found a potential buyer, a Pakistani national later identified as a Mr. Mumtaz Ahmed Muslim, who would purchase the property for a price of AED 40 million, of which the second claimant's share would be AED 10 million. Subsequently, the defendant advised that the correct calculation of the second claimant's share would be AED 9 million rather than AED 10 million.

[20]Later, in 2011, the claimants were able to obtain a copy of the sale agreement with Mr. Muslim, which was dated 10 February 2008 and was made between Jackinson (stated, wrongly, to be a company owned by the first claimant and the defendant) and Mr. Muslim, with the defendant authorised to act on behalf of Jackinson by virtue of the power of attorney referred to at [13] above. The sale price was AED 40 million, of which AED 4 million had already been paid and the balance was payable in specified instalments between 11 March 2008 and completion, which was to take place following construction of a villa on the site, by 31 July 2008. Payment was to be made to the defendant personally.

[21]In late spring 2008 the defendant told the first claimant that he had received AED 16 million as a down payment and that he would transfer the sum of AED 2 million to the second claimant as an advance payment of her share of the expected net proceeds. He duly did so on 27 May 2008.

[22]Subsequently, however, the agreement with the purchaser, Mr. Muslim, was revised without the claimants' knowledge, with the price increasing to AED 42 million, with various changes to the design of the property, and with the target date for completion being postponed to 1 September 2008. Again, the claimants have obtained a copy of a Memorandum of Understanding recording these terms from Mr. Muslim. The MOU records that by 16 September 2008 a total of AED 17 million had already been paid and that a further AED 1 million was to be paid on signing of the MOU.

[23]Completion of the sale did not take place in September 2008. It appears to have been overtaken by the worldwide recession which occurred at that time and had its impact on property values in Dubai as elsewhere. It seems that the defendant and Mr. Muslim had a meeting on 26 March 2009 at which Mr. Muslim exercised a right to cancel the MOU dated 16 September 2008 and offered instead to proceed with the purchase at a much reduced price of AED 26 million. The defendant rejected that offer. However, Mr. Muslim remained interested in purchasing the property (in which, after all, he had already invested some AED 18 million) and eventually a further Memorandum of Understanding was concluded, dated 12 May 2011, by which Mr. Muslim agreed to purchase Plot E146 and the property built on it which had by then been completed for a price of AED 34 million.

[24]It was only in June 2011 that the first claimant discovered the detail of the defendant’s dealings with Mr. Muslim, when he learned of the latter's identity through a mutual friend who put them in touch. Mr. Muslim provided a brief history of those dealings together with the principal documents recording them to which I have referred. He advised also that he expected to complete the purchase by early July 2011.

[25]Further inquiries by the first claimant enabled him to establish that the defendant had paid AED 8 million to the developer who had built the property on Plot E146, which had been paid out of the sum of AED 18 million received from Mr. Muslim in 2008. This left a profit so far (before taking account of any further costs of the sale) of AED 10 million, of which the claimants’ 50% share should have been AED 5 million. As the defendant had only paid AED 2 million (see [21] above), the first claimant demanded a further payment of AED 3 million.

[26]The defendant, who may by this time have learned that the claimants were taking steps through their solicitors to investigate how it was that the defendant was dealing with the sale on behalf of Jackinson without reference to the claimants, did not deny that the sale was taking place or that the claimants were entitled to their share of the proceeds. Instead on 19 July 2011 he sent a text message in the following terms:

“Pls do not rock the boat through ur city lawyers and waste ur monies fighting me. I was about to say to you that insha-allah I will be able to pay AED 3,650,000 (USD 1 million) by the first week of August and wanted to know the beneficiary taking into account ur tax implications.”

[27]He followed this with an e-mail dated 20 July 2011 under the subject heading of “Let Common sense prevail” which stated: “... I am nearly there. That is why I had to transfer the shares into my name. Because this time, I am certain that I will be able to close the deal and give you your due share. Please let common sense prevail. ... ... I have briefed my family members last night again about your share and they have been made fully aware of your rights. I have asked you to give me until the first week of August, fifteenth at the latest to close this painful chapter forever. ..."

[28]Two days later the first claimant sent a detailed e-mail to the defendant protesting at his conduct, in particular his misuse of the power of attorney and other steps taken to transfer the shares in Jackinson into the defendant’s own name, his failure to provide full details relating to the sale of the property, and his failure to pay the second claimant her share of the funds received in 2008. He indicated that the claimants were prepared to agree to the sale to Mr. Muslim being completed, provided that the AED 3 million representing the second claimant’s share of the funds already received were immediately paid, and that steps were taken to ensure that the second claimant’s share of the further balance payable on completion, a share which would amount to a further AED 4 million, would be paid.

[29]The defendant responded, in an e-mail also dated 22 July 2011, stating among other things that:

“I just need two to three weeks to close the deal on E146 and all accounts will be settled with transparency and clarity. … Let us not break family ties over money matters. I am nearly there. Please just ask your Solicitor to give me a breather for two to three weeks at the latest for me to complete the deal. All accounts will be settled. I did send you an SMS text to say that I will be in a position to pay AED 3,650,000 by 7th of August, and the balance on settlement of taking both the properties in account and taking other expenses incurred by me which would be shared equally with our joint-venture partners. But I am not in a position to put you in funds in advance at the moment.”

[30]Despite the claimants’ insistence that completion of the sale to Mr. Muslim should only take place with their involvement, by now the defendant was in sole control of Jackinson and on 28 July 2011 the sale was completed. Payment of the balance of the purchase price, AED 16 million, was made to the defendant personally.

[31]On the following day, 29 July 2011, the defendant sent another e-mail to the first claimant, complaining that the pressure exerted by the first complainant had caused him to suffer a heart attack, and stating:

“The matter of contention is your share of monies which can be sorted out amicably; failing which you may bring charges against me. The damage is so serious that I am now prepared for anything. Nothing will surprise me any more.”

[32]The first claimant responded by asking once again for full details of the sale and for payment of the second claimant’s rightful share of the sale proceeds. The defendant did not respond until 10 August 2011, when he sent an e-mail stating:

“Further to my e-mail of the 20th and the 29th of July, I am pleased to inform you that I have now concluded the deal on E146 and all the transfers and formalities have been completed. … I could not jeopardise our interests and those of our joint venture parties by acceding to your request not to conclude. I used my judgment as we could not afford to lose this deal again any more. … Can we now not resolve our differences? You want me to come out clean with you. I have nothing to cleanse but I am still prepared to address all your accusations and charges against me. But I am prepared to sit with you and sort out our account asap. I am now in a position to send you or to your designated bank/lawyers, a sum of AED 4,000,000 immediately if your lawyers instruct Dr Junod to release the Share Certificate in my name and send it to me at Dubai by courier. I need it to complete the formalities with the Buyer and the Lenders. With the above amount you would be receiving a total of AED 10,000,000 on an investment of AED 2,770,000. We will settle any sum above that, that you may still feel being short changed in an amicable manner and thus restore our old ties again.”

[33]Despite these promises, the defendant did not make any payment to the claimants in early August. During August and September there was some discussion about providing post dated cheques, but this was not acceptable to the claimants who saw no reason why any cheques should be post dated when the defendant had already received the proceeds of sale. There were also further promises by the defendant, by text message, assuring the first claimant that he had “every intention to pay what is rightfully yours” and promising on 18 September 2011 that “I will deal with it 2moro before returning to the hospital”. In the event, however, nothing was paid.

Commencement of proceedings and service of the Claim Form

[34]The Claim Form in this action was issued on 25 October 2011. The principal relief sought was an account of all sums received and expenses incurred by the defendant in relation to the sale and development of Plot E146, together with an order for payment to the second claimant of all sums found to be due on the taking of such an account. The claimants calculate that there is likely to be a balance of AED 7.5 million (approximately equivalent to £1.2 million) due to the second claimant, but acknowledge the possibility that the balance may be less if the defendant can show that he incurred greater expenses, or was required to pay more to the developer, than the claimants have allowed.

[35]The claimants’ solicitor instructed a process server, Mr. Kevin O’Connor, to serve the Claim Form and Particulars of Claim at the defendant’s house in Pinner. According to Mr. O’Connor’s contemporary report, confirmed by a witness statement in this action, he arrived at the property on 26 October 2011 at 1.15 pm. It was a large detached house set some distance back from the road and secured by electronic entrance gates. There were two motor cars parked on the driveway, a silver Jaguar and a blue Land Rover. These can be seen on photographs taken by Mr. O’Connor. There was an intercom located in the gate pillar which Mr. O’Connor buzzed. It was answered by a male voice. Mr. O’Connor asked for the defendant, saying that he had documents to deliver. The voice confirmed that the defendant was resident at the property, but said that he was not at home and instructed Mr. O’Connor to place the documents in the external mailbox located by the entrance gates. Mr. O’Connor telephoned the claimants' solicitor, who confirmed that this was acceptable, and accordingly Mr. O’Connor left the documents in the mailbox as instructed.

[36]For the purpose of this application there is no reason to doubt Mr. O’Connor’s account. He has no incentive to lie and cannot be mistaken about the fact that he spoke to a male person over the intercom, or about what that person said; his account is contained in a contemporary report produced the following day, before any possible issue about service arose; and it is supported so far as it can be by his photographs. The essence of it is also contained in the certificate of service dated 26 October 2011 which refers to the “conversation with male occupier via intercom who confirmed defendant resident but not at home at the time of visit". I can and do therefore conclude with confidence that there was somebody at the property with whom Mr. O’Connor had the conversation which he describes.

[37]Ms. Rachel Sleeman for the defendant pointed out that in some respects the witness statement of the claimants' solicitor, Mr. Alexander Vassiliades, goes further than Mr. O’Connor’s own contemporary report and subsequent witness statement, for example by asserting that according to Mr. O’Connor it seemed to be the defendant who answered the intercom. There is some force in that criticism, although it may be no more than inaccurate drafting of the relevant paragraph of the witness statement in failing to distinguish clearly between Mr. O’Connor’s own evidence and the inference which Mr. Vassiliades draws therefrom. Be that as it may, I found my conclusion on Mr. O’Connor’s own contemporary report.

[38]The identity of the individual who spoke to Mr. O’Connor is a matter of some significance. According to the defendant’s witness statement dated 21 November 2011, he was not at the house on 26 October 2011. Although he was in England at the time, he says that he was staying with his son, Mr. Muhammad Ali Kanani, and attended the Wellington Humana Hospital for treatment on the day in question. When he left the hospital on that day, he did not return to the Pinner house before leaving for Dubai on 29 October 2011. The Claim Form and Particulars of Claim were only discovered when the defendant's son attended at the house on 30 October 2011 in order to collect the post.

[39]Mr. Vassiliades’ statement is dated 2 December 2011. Although it is vulnerable to the criticism to which I have referred at [37] above, it does at least put clearly in issue the account given by the defendant, and asserts that the claim that the documents were only discovered when the defendant's son visited the property on 30 October 2011 is "somewhat disingenuous". Despite this, no attempt was made by the defendant to provide further information in support of his account, or to identify the person to whom Mr. O’Connor spoke, until 31 May 2012, the day before these applications were due to be heard. On that day the defendant served two witness statements, one from his wife and one from his daughter.

[40]The account given by the defendant's wife, Mrs. Rosmina Kanani, confirmed that her husband was at the Wellington Humana hospital receiving treatment on 26 October 2011, after which he went to stay with their son at his flat in Lisson Grove, where he remained until the defendant and his wife returned to Dubai on 29 October 2011. Mrs. Kanani therefore accepts (as was confirmed in argument) that she was also present in England at the time, but oddly she does not say that she was staying with their son, only that the defendant was. Nor does she say where she was staying. She does not attempt to deal with the identity of the individual to whom Mr. O’Connor spoke at the Pinner property.

[41]The defendant's daughter, Zain Kassam, says only that she was in Dubai on 26 October 2011 and knew only that her father was on a short visit to England for medical treatment.

[42]There was no further statement from the defendant himself, or any explanation of why there could not have been, and no independent evidence (such as hospital records) to verify the defendant's whereabouts.

[43]In the event the hearing could not take place on 1 June 2012 because there was no judge available. That gave the claimants an opportunity to answer this evidence, which they did by serving further witness statements on 7 June 2012. These included the witness statement of Mr. O’Connor to which I have already referred, and a statement by the first claimant in which he refers to having telephoned the defendant's Pinner property on at least one occasion in October 2011 in an attempt to speak with the defendant when he was told by Mrs. Kanani that the defendant was resting. He exhibited also a number of text messages from the defendant including one, sent on 28 October 2011, in which the defendant said:

“I have just left Princess Grace Hospital where I was advised by a panel of cardiologists to go for a by-pass operation but as promised to you, I will postpone it until I have settled with you. However, I may have to go for one further scan 2moro which may delay my arrival in Dubai by 2 to 3 days. I had promised u to be there by the 31 Oct but this delay is beyond my control.”

[44]This appears to refer to treatment at a different hospital. The claimants suggest that this message was the result of the defendant seeing the court documents left at the Pinner property. Whether it was or not, it represents a further acceptance by the defendant of his need to settle with the claimant.

[45]The claimants' evidence prompted a further statement on behalf of the defendant, this time from his son, Mr. Muhammad Ali Kanani, dated 12 June 2012, the day before the hearing before me. This statement confirmed that the defendant was collected by his son from the Wellington Humana Hospital in the afternoon of 26 October 2011 and was taken to his son's flat, where the defendant stayed until his son took him to the airport on 29 October 2011; and that the defendant's son collected the post, including the claimants' court documents, from the Pinner property on 30 October 2011.

[46]Accordingly the defendant has made no attempt, despite every opportunity, to identify the individual to whom Mr. O’Connor spoke, a matter which ought to have been within the defendant's knowledge as only he would know who had access to the property. However, it is not suggested that anybody had access to the Pinner property other than the defendant, his wife and his son. There was no tenant in occupation during periods when the defendant and his wife were in Dubai. It is not suggested that there were staff in residence, or any caretaker or similar individual who could have been in the property or answered the intercom. This constitutes a large hole in the defendant's evidence, with which he has not attempted to deal. Nor has there been any explanation of why the two motor cars were parked in the drive when Mr. O’Connor attended, or of Mrs. Kanani’s whereabouts at and around this time.

[47]It would be wrong, on an application of this nature where there has been no cross examination, to reach any final conclusion about this, and I do not do so. However, for the purpose of this application there is at least a very strong case that the individual who answered the intercom and confirmed that the defendant was resident at the property was either the defendant himself or his son. It is impossible (and Ms. Sleeman was unable) to make any other suggestion as to who it could have been.

[48]There is no escaping the further conclusion that if the individual in question was either the defendant or his son, it follows that the defendant, his wife and son have all given false or misleading evidence on these applications. Once again, I do not reach any final conclusion that this is so. However, faced with a choice between accepting Mr. O’Connor’s independent and contemporary evidence and accepting the evidence of the defendant and his family, I do conclude for the purpose of this application that there is a very strong case that the evidence on this issue served on behalf of the defendant cannot be relied upon.

[49]The implications of this conclusion are considered at [61] below.

Has there been valid service of the proceedings on the defendant?

[50]The first issue for decision is whether there has been valid service of the proceedings on the defendant. If there has not been proper service, the defendant's application must succeed and the other issues do not arise.

[51]It is common ground that whether there has been valid service depends on whether the Pinner property constitutes the defendant's "usual residence": CPR 6.9(2). It is not suggested that the property constituted a "last known residence" and accordingly there is no need to consider the meaning of this latter phrase. The meaning of "usual residence" was considered by the Court of Appeal in Relfo Ltd (in liquidation) v. Varsani

[2010] EWCA Civ 560

[2011] 1 WLR 1402

, from which I derive the following points.

[52]First, it is for the claimants to satisfy me that there is a "good arguable case" that the property is the defendant's "usual residence". That means that the claimant must establish that it has a much better argument on the available material than the defendant.

[53]Second, a person can have more than one residence, and indeed more than one "usual residence”, at any given time. Thus the fact that the defendant's principal residence is agreed to be in Dubai is not determinative.

[54]Third, in determining whether a place constitutes a defendant's residence, what matters is the "quality" of the defendant's use and occupation of the property as a home, this being described as a question of fact and degree. Thus in the "oligarch" cases (Cherney v. Deripaska

[2007] EWHC 965 (Comm)

, [2007] 2 All ER (Comm) 785 and OJSC Oil Co Yugraneft v. Abramovich

[2008] EWHC 2613 (Comm)

) the defendants owned houses in several countries and their visits to their London houses were sporadic, usually for single nights and for the purpose of business meetings and football matches respectively. The houses in question were in no sense a home. In contrast, in Relfo, the defendant's family lived permanently at the house owned by the defendant and his wife in Edgware, the defendant visited it every year to see his family, staying for considerable periods of time, and he had described it as his home in court proceedings in Singapore. It is not surprising, therefore, that in the oligarch cases the properties in question were held not to constitute the defendants’ residences, let alone usual residences, while in Relfo the opposite conclusion was reached. While the parties' submissions in the present case focused to some extent on whether the facts here are closer to those of the oligarch cases or the Relfo case, that is not the relevant question. There is no doubt that the facts are materially different from both Relfo and the oligarch cases. The relevant question is whether the quality of the defendant's use and occupation of the Pinner property is such that it can properly be regarded as his home, while recognising that his principal home is in Dubai.

[55]Fourth, in the event that this question is answered affirmatively, so that the property constitutes the defendant's residence, it must also qualify as his "usual" residence. For this purpose the critical consideration is the defendant's settled pattern of life, meaning the way in which his life is usually ordered, and in particular whether the defendant's use of the property has a degree of continuity and permanence.

[56]Fifth, in considering both the question of "residence" and "usual residence”, it is not relevant merely to compare the duration of periods of occupation, without taking proper account of the nature or quality of use of the premises. Accordingly the fact that the defendant spends only a limited amount of time at the Pinner property, and spends much more time at his home in Dubai, does not necessarily mean that the Pinner property is not his “usual residence".

[57]The facts in the present case are that the defendant had his principal residence in this country at one time, but since at least June 2001 has had his principal residence in Dubai, living at a rented apartment with his wife and his wife’s elderly mother. Dubai is also the centre of the defendant's life and business. However, he has owned the Pinner property together with his wife for many years. Although he no longer has business interests in this country, he visits regularly for the purpose of obtaining medical treatment and at the same time visiting family members. His son, as already indicated, has a flat in Lisson Grove and other family members live here. In addition, according to Mrs. Kanani’s evidence, the defendant also occasionally visits UK customers of one of his UAE businesses.

[58]There is a dispute as to the extent of the defendant's use and occupation of the Pinner property. According to the first claimant, who has known the defendant for many years, the defendant’s practice was to make three or four trips to London each year, with his wife, which on occasion would involve staying at the Pinner property for periods of up to two months during the summer. The first claimant says that the only reason why the defendant and his wife maintain a substantial property in London is because they travel here frequently. The first claimant maintains also that the defendant was in this country during much of September and almost all of October 2011, and has produced text messages exchanged with the defendant which appear to confirm that. In particular, a text message sent by the defendant on 18 September 2011 reads as follows: “... I was being investigated for continuous discomfort on the left side & hand. I have just come back home. I will deal with it 2moro before returning to the hospital to have lungs checked."

[59]Although Ms. Sleeman submitted that the reference to coming back home should be understood as referring to the defendant returning to Dubai, that is not the most natural meaning of the message. In context, it makes more sense if the "home" referred to is the Pinner property. In addition, the first claimant refers to conversations with the defendant's daughter, with whom he had a good relationship, which support his claim that the defendant was in this country receiving hospital treatment for much of this time. I have in addition already referred at [43] above to the first claimant's evidence that he telephoned the defendant's Pinner property on at least one occasion in October 2011 and was told by Mrs. Kanani that the defendant was resting, and to the confirmation given by the individual who spoke to Mr. O’Connor that the defendant was resident at the property.

[60]The defendant says very little about the nature of his use and occupation of the property. He says no more than that he usually only visits England for hospital treatment for a heart condition and other health problems and at the same time briefly visits family members, adding that over the course of the last year (that is to say, the year preceding his witness statement dated 21 November 2011) he was in England for less than 30 days. He does not, however, say anything about whether this was similar to previous years. Mrs. Kanani briefly supports this evidence, saying that she makes infrequent short visits to England to accompany her husband for hospital treatments and occasionally to see UK customers. Their son says only that his parents rarely stay at the Pinner property.

[61]In considering what to make of this conflicting evidence, it is appropriate in my view to take account of the conclusions reached at [47] and [48] above to the effect that there is a very strong case that the individual who answered the intercom and confirmed that the defendant was resident at the property was either the defendant himself or his son, and that the evidence on that issue served on behalf of the defendant, which is evidence going directly to the defendant's use and occupation of the property, cannot be relied upon. Of course, even if the defendant or his son were present in the property when Mr. O’Connor attended, and even if one or both of them has given untrue evidence in this action about that, that does not of itself prove that the property was the defendant's usual residence. However, in the light of Mr. O’Connor’s evidence and the defendant's failure to explain the presence of the unidentified speaker, it seems to me to be very likely that the defendant and his family members (the latter acting, no doubt, out of a sense of misplaced loyalty) have understated the true extent of the defendant's and his wife's use and occupation of the Pinner property. I consider, therefore, that so far as the facts are concerned, the claimants have much the better of the argument, and that the true position is likely to be as described at [58] above.

[62]On that basis, I consider that the "quality" of the defendant's use and occupation of the Pinner property was as their home in this country, a home which they used reasonably frequently over a period of many years when visiting family, coming for medical treatment and occasionally visiting customers. The property was unoccupied when the defendant and his wife were not there, precisely so that it was available for their use as and when they chose to visit. Such visits formed part of the defendant's and his wife's settled pattern of life and, extending as it did over many years, had a substantial degree of continuity and permanence. I am satisfied, therefore, applying the tests set out above, that there is at least a good arguable case that the Pinner property constituted the defendant's "usual residence” for the purpose of CPR 6.9(2).

[63]This means that the defendant has been validly served and that the claimants have established jurisdiction over him as of right, subject only to the question whether the court should decline to exercise that jurisdiction on forum non conveniens grounds, the question to which I now turn.

Should the proceedings be stayed on forum non conveniens grounds?

[64]It is common ground that the applicable principles are those set out in Spiliada Maritime Corporation v. Cansulex Ltd

[1987] 1 AC 460

and, in particular, that in a case where the claimant has established jurisdiction as of right in accordance with English law, the burden is on the defendant to show that there is some other available forum which is clearly the more appropriate forum for the trial of the action. For this purpose it is necessary to consider what factors point in the direction of that other forum and to weigh them against factors pointing in the direction of the English court. The defendant contends that the appropriate forum is Dubai.

[65]In the present case there is no reason to suppose that justice could not be done by the court in Dubai, and I proceed on the basis that it could. At the outset of the hearing I refused the defendant permission to adduce evidence from an English solicitor practising in Dubai (but not having any Dubai legal qualification) about the law of Dubai and the practice of litigation there, on the grounds that it came far too late, but that does not affect the fact that this court will assume that justice can be done in the courts of a friendly foreign state unless there is at least some reason to suppose the contrary. However, it seems a reasonable assumption that proceedings in Dubai would be conducted in Arabic, and there is no evidence that any of the parties speak or understand Arabic, all their communications having been in English. Accordingly the parties would to some extent be unable to follow any proceedings, at any rate without the assistance of interpreters, while all the material documents appear to be in English and would need to be translated.

[66]The land which was the subject matter of the parties' agreement was of course in Dubai, but I regard that as a factor of no real significance. The claim is for an account of the proceeds of sale, so that the land has effectively been turned into money, and it makes no real difference to the proceedings that the land in question was in Dubai rather than elsewhere. The parties' dispute is simply about money.

[67]Both the claimants and the defendant are primarily resident in Dubai, but they also have a substantial connection with England. The claimants are British citizens, while the defendant has a right of residence here. They both own property here and are regular visitors, the claimants probably more so than the defendant. I have found that the defendant has a usual residence in this country.

[68]There does not appear to be any real issue between the parties about whether an agreement was made such as is alleged by the claimants. There is an issue whether the agreement on which the claimants rely was made in England and was subject to English law. I am satisfied that there is a good arguable case that the agreement was made in England. It was certainly made, if at all and to the extent that there is any issue about this, in a discussion conducted in the English language. To my mind that is a much more important factor than its governing law, whatever that may be. It is not self-evident that the agreement was governed by English law, and it may well not be, but it is not suggested that this would make any difference to the outcome. Thus Ms. Sleeman was not able to identify any issue of interpretation of the oral agreement, if it exists, whether under English or Dubai law. The task for the court will simply be to determine what the parties agreed (to the extent that this is in issue) and to give effect to that agreement. Since the agreement was made in English, and the closest document to a record of it (the defendant's e-mail dated 7 February 2007: see [16] above) is also in English, that is a task which the English court will be best able to accomplish.

[69]That assumes, however, that there is some relevant issue needing to be determined. In my judgment, the most significant factor in the present case is that, at any rate so far as liability is concerned, there is no suggestion that the defendant has any defence on the merits to the claim for an account. In order for the court to determine where an action can most appropriately be tried, it needs to be given at least some idea of the nature of any issues which will arise. Ms. Sleeman emphasised that it is not the court's task on an application for a stay on forum non conveniens grounds to determine the merits, a proposition I accept, but she accepted that an applicant for a stay has a burden to identify the issues which will arise in the action. Unless an applicant does so, he is likely to be unable to discharge the burden of showing that some other forum is clearly more appropriate for the determination of the action. In the present case the defendant has deliberately, and despite the order of Gloster J referred to at [2] above, decided not to indicate what his defence is likely to be. The overwhelming likelihood, in my judgment, is that this is because he has not got one, at any rate in relation to liability. Even if that is not the case, however, and the defendant is simply keeping his powder dry, his decision means that he is unable to discharge the burden upon him.

[70]Thus Ms. Sleeman indicated that there might be relevant witnesses who were resident in Dubai, such as Mr. Muslim (the purchaser of Plot E146) or Mr. Kamal (the developer), but she was unable to say to what issues their evidence might go. Similarly she pointed to the fact that the various agreements obtained from Mr. Muslim by the claimants were governed by Dubai law and subject to Dubai arbitration or litigation in the event of dispute. However, she was unable, in the absence of any indication of what the defendant's defence would be, to identify any issue arising under any of these agreements which might need to be decided in this action.

[71]It is I suppose possible that there may be issues in due course about the amount of the sale proceeds received by the defendant or the expenses incurred by him in paying the developer and selling the property, and possible that the evidence or documents relating to such matters may be located in Dubai. However, when the defendant has not troubled to adduce evidence to this effect, I see no reason to speculate about this in his favour and, even if it is the case, the action needs to be looked at as a whole.

[72]Looking at the matter overall, I am not satisfied that Dubai is a clearly more appropriate forum for the determination of this action than England. It is also a relevant consideration, in my judgment, that the defendant has a substantial asset here, namely the Pinner property, against which an English judgment can readily be enforced, while there is no evidence of any assets owned by the defendant in Dubai and no need to put the claimants to the trouble of enforcing a Dubai judgment in this country.

[73]For these reasons the defendant's application for a stay fails.

Should the court proceed immediately to determine the claimant's application for summary judgment?

[74]In Speed Investments Ltd v. Formula One Holdings Ltd

[2004] EWHC 1772 (Ch)

[2005] 1 WLR 1233

, Lewison J considered the approach which the court should take when a defendant challenges the jurisdiction under CPR 11 and the claimant seeks summary judgment under CPR 24. He held, at [18], that:

“Although, therefore, I accept that the court does have the power to permit an application for summary judgment to be made before an outstanding challenge to the jurisdiction has been determined, it seems to me that it will be a very rare case in which the court exercises that power. In general terms, as Rix J says, the price that a claimant must pay for being able to bring foreign defendants before the court is that they have a real opportunity to decide whether or not to submit to its jurisdiction.”

[75]The decision of Rix J to which Lewison J referred was European Capital Trade Finance Ltd v. Antenna Hungria RT (unreported, 27 March 1995), a case decided under the Rules of the Supreme Court. The reasoning of this decision was that when a jurisdiction challenge fails, the defendant has another 14 days to decide whether to submit to the jurisdiction by lodging a further acknowledgment of service or to allow the action to proceed against it by default "on the basis that it has no assets within the jurisdiction and no intention of bringing assets within the jurisdiction and that without submission to the jurisdiction a default judgment rendered against in England cannot be enforced against it in its own jurisdiction". Rix J added that:

“It may seem unfortunate to a plaintiff with an unanswerable claim that a foreign defendant may hold up summary judgment first by a challenge to the jurisdiction, and then by insisting on a further period to lodge his second acknowledgment of service. That, however, is the price such a plaintiff must pay out of regard for all those foreign defendants who, for reasons of comity, are to be allowed to challenge the jurisdiction of these courts without prejudicing or pre-empting their defence on the merits or their decision as to whether, if their jurisdictional challenge fails, they wish nevertheless to submit to the jurisdiction of the English courts.”

[76]The same reasoning applies to the current rules of court contained in CPR 11.

[77]Ms. Sleeman submitted that, if I was against the defendant (as I am) on the issues of service and forum non conveniens, I should proceed no further, but should give the defendant an opportunity to file a second acknowledgment of service pursuant to CPR 11(7)(b) and should give directions as to the filing and service of a defence pursuant to CPR 11(7)(c), without determining the claimant's' summary judgment application. After hearing argument from both parties I concluded (but without reaching a final decision at that stage) that this might well be one of those “very rare” cases in which it would be appropriate to determine the summary judgment application at the same time as ruling on jurisdiction. I ruled, therefore, that I would hear such arguments on summary judgment as the parties wished to present and would then determine what course to adopt, giving my decision and reasons in this judgment. This seemed the most cost effective course. Mr. Mawrey QC for the claimants then made his submissions on summary judgment, which in the event took only a few minutes. Ms. Sleeman had already indicated that her instructions from the defendant were to make no submissions on the summary judgment application and she did not do so. She explained that this was because the defendant was not prepared to submit to the jurisdiction of the court, or even to indicate the nature of his defence, although in my judgment there would have been nothing to prevent such submissions from being made without prejudice to the defendant's position on jurisdiction and doing so would not have constituted a submission to the jurisdiction.

[78]It appears to be common ground, following the decision in Speed Investments, that I have power to determine the claimants' summary judgment application at this stage, but that I should only do so in a "very rare" or exceptional case. The question, therefore, is whether this is such a case. I have concluded that it is. My reasons follow.

[79]First, the direction of Gloster J provided expressly that the parties should prepare for an effective hearing of both applications, including therefore the claimants' summary judgment application. It was therefore incumbent on the defendant at least to identify the nature of his defence, which in any event he would have been expected to do in order to pursue his application for a stay on forum non conveniens grounds. The suggestion that he did not do so because he did not wish to be taken to have submitted to the jurisdiction of this court is without substance. Instead he adopted a deliberate tactical decision, contrary to the direction made by Gloster J, and (it must be assumed) with full knowledge of the possible consequences. I have no doubt that he did so because he knew perfectly well that he had no defence which could be put forward with any prospect of success.

[80]Second, the claimants' claim is for an account of the proceeds of sale, rather than for judgment in a specific money sum. It is not only abundantly clear that the defendant has no defence to the claim for an account, but he has also made repeated admissions that he is obliged to account for the proceeds to the claimants. This is unlike the typical summary judgment application, where the defendant is at least maintaining that he has some sort of defence.

[81]Third, because the claim is for an account and not for a specific money sum, it will be open to the defendant to put forward whatever case he has as to the net proceeds of sale in order to show that the true extent of his liability is less than the AED 7.5 million calculated by the claimants. Alternatively, if he chooses, he can take no further part in the action.

[82]Fourth, in the light of not only the defendant's failure to comply with his own promises to make payments to the claimants, but also his failure even to indicate the nature of any defence to the claim for an account, I am entirely satisfied that the defendant's stance is solely motivated by the desire to put off the evil day when he must pay the claimants the money to which they are entitled -- and, in some part at least, to which they have been entitled for some years.

[83]Fifth, the reasoning of Lewison J in Speed Investments and of Rix J in European Capital Trade Finance was principally concerned with the position of a typical foreign defendant without presence or assets in this jurisdiction. Such a defendant should have the opportunity to challenge the jurisdiction of the English court without submitting, and (if the challenge fails) should not lose the benefit (in terms of being able to resist enforcement in his home jurisdiction) of the fact that any English court judgment may be unenforceable as a default judgment. A defendant in that position has a real choice, either to defend the case on the merits after his jurisdiction challenge fails or to allow a default judgment to be entered against him. Those considerations do not apply, or at any rate have much reduced force, when the defendant is resident within the jurisdiction and has assets here against which any judgment may be enforced, regardless of whether it is a default judgment. That is the position here. I have found that the defendant has a usual residence within the jurisdiction. He is not, therefore, a typical foreign defendant such as Lewison J and Rix J had primarily in mind, but is resident here even though he is also resident abroad. Further, he has assets here, namely the Pinner property, against which an English court judgment can be enforced. Such a judgment will be enforceable regardless of whether it is a default judgment. Accordingly the “benefit” to a typical foreign defendant of allowing the proceedings to go by default so that he will be able to resist enforcement of an English judgment will not avail the defendant in the present case.

[84]In my judgment the combined effect of these factors is that the present case qualifies as "a very rare case" in which the court should exercise its power to determine the claimants' summary judgment application at the same time as dealing with the defendant's challenge to the jurisdiction. If this is not a suitable case for such a course of action, it is difficult to envisage what would be. To do otherwise would represent an injustice to the claimants who have waited for their money for long enough and, in my judgment, causes the defendant no prejudice.

Is the claimant entitled to summary judgment?

[85]It follows from what I have already said that the claimant is entitled to judgment on his claim for an account. It is unnecessary, in order to reach this conclusion, to make any decision as to the claimants' complaints that the defendant failed to provide them with proper information and acted unlawfully in connection with his transfer of the shares in Jackinson into his sole name. It is sufficient to say, as the defendant himself has repeatedly accepted, that he is obliged to account for the net proceeds of sale of Plot E146.

[86]To summarise, there is unchallenged evidence that the parties concluded an oral agreement to the effect that Plot E146 would be sold and that the net proceeds of sale would be shared equally between them (see [11] above); the defendant recorded that agreement (even if, in some respects, not altogether accurately) in his e-mail dated 7 February 2007, which itself made clear that it was intended to constitute a legally binding document (see [16]); there is no dispute about the fact that Plot E146 has been sold and that the defendant has received the proceeds of sale, as the defendant himself has acknowledged, for example in his e-mail dated 10 August 2011 (see [32]); there have been repeated promises by the defendant to pay to the claimants their 50% share of the net proceeds (see [26] to [33] and [43]); but despite all this, nothing has been paid apart from the AED 2 million paid in May 2008 (see [21]).

[87]I have considered whether, despite the defendant's failure to indicate the nature of any defence, there could nevertheless be some defence to the claim for an account, but in my judgment that is inconceivable.

Conclusion

[88]Accordingly the defendant's challenge to the jurisdiction will be dismissed and the claimants are entitled to an order that the defendant furnish to the claimants’ solicitors a full account of all monies disbursed and received by him and/or by Jackinson in connection with the land known as Plot E146, Emirates Hills, Dubai from 1 January 2005 to date.

[89]The claimants also seek an interim payment. I will deal with any such application following the handing down of this judgment.

order

a. Has there been valid service of the proceedings on the defendant?

b. Should the proceedings be stayed on forum non conveniens grounds?

c. If not (that is to say, if there has been valid service and the application for a stay fails), should the court proceed immediately to determine the claimant's application for summary judgment?

d. If so, is the claimant entitled to such judgment? Background