Mr David Sterling v Mrs Miriam Rand
| Jurisdiction | England & Wales |
| Judge | Ms Ambrose |
| Judgment Date | 26 June 2018 |
| Neutral Citation | [2019] EWHC 2560 (Ch) |
| Docket Number | No: BL-2018-001435 |
| Court | Chancery Division |
| Date | 26 June 2018 |
[2019] EWHC 2560 (Ch)
Ms Clare Ambrose sitting as a Deputy High Court Judge
No: BL-2018-001435
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane
London, EC4A 1NL
Mr H. Bor (instructed by Waller Pollins Goldstein) appeared on behalf of the Claimant.
Mr J. Holmes-Milner (instructed by DPA) appeared on behalf of the Defendants.
This is the adjourned hearing of the Claimant's application by an arbitration claim form dated 26 June 2018 for summary enforcement of an arbitration award dated 25 January 2015 (“the Award”). An initial hearing in this matter took place on 10 April 2019 and I repeat parts of the judgment given at that stage so that matters are covered as a whole in this judgment.
The Award was made by a tribunal consisting of Dayan Gelley, Dayan Abraham, and Dayan Simons. They were acting as dayanim (judges) of the London Beth Din (Court of the Chief Rabbi). I refer to the tribunal as “the Beth Din”. The Award arises out of a dispute between the parties relating to a property at 4, Dunsmure Road in Stoke Newington (“the Property”).
The dispute before me raises issues as to the powers available under the Arbitration Act 1996 (“the 1996 Act”) to a Beth Din tribunal to order specific performance of a contract relating to land. It also raises issues as to the proper exercise of the court's discretion to refuse to make an order enforcing a domestic arbitration award under section 66 of the 1996 Act.
The Procedural Background
There were two previous sets of proceedings relating to enforcement of the Award. Proceedings were issued in the Commercial Court by the Claimant on the 16 December 2016, and a second set of proceedings was issued in 2017.
By an order dated 3 May 2018, made following an oral hearing on the 13 April 2018 at which both parties were represented, Popplewell J made an order that both claims be struck out, and that any further proceedings to enforce the Award be issued in the Chancery Division. There were some administrative errors on the court's part regarding the first set of proceedings. Following that order of 3 May 2018 these proceedings were issued in June 2018. Following a directions hearing on December 2018, at which both sides were represented by counsel, Deputy Master Bartlett made an order listing this matter for a one-day hearing. He refused the Defendants' request to serve further witness evidence, but allowed the Defendants to serve further documents, and the Claimant was allowed to serve documents in addition following the Defendants' disclosure. The Defendants at that hearing confirmed that their grounds for objection would be limited to those they had put forward in their skeleton argument of 11 April 2018.
The matter was listed before me on 10 April and I gave permission to file and serve further evidence including expert evidence as to Jewish law. I dealt with a number of the Defendants' objections but left open those relating to section 48(5)(b) of the 1996 Act, the workability of the Award, and more generally the exercise of discretion under section 66. The evidence before this court was as follows:
a) A copy of the arbitration agreement that both sides signed in October 2014;
b) The Award;
c) The Heskem dated 19 March 2008, and a translation;
d) The Claimant's First and Second statements;
e) Witness statement of Mr Shimon Stern dated 14 June 2019;
f) Witness statement of Mr Shlomo Davidovits (the Claimant's rabbinical advocate at the hearing before the Beth Din);
g) A report from Dayan Hool, instructed on behalf of the Claimant to give expert evidence of Jewish law;
h) Mr Rand's witness statement;
i) Three witness statements from Mrs Rand;
j) Documents disclosed by the Defendants in January 2019;
k) Witness statement of Mr Alexander Strom (the Defendants' rabbinical advocate before the Beth Din); and
l) A report from Dayan Schmahl, instructed on behalf of the Defendants to give expert evidence of Jewish law.
The relief that the Claimant is seeking in this application are orders under s.66 and/or s.66(2) of the 1996 Act for:
“(1) permission to enforce an arbitration Award of the London Beth Din dated the 25th January 2015 (“the Award”), which has not been complied with, in the same manner as a judgment or order of the court to the same effect; and/or (2) for judgment to be entered in terms of the Award and other orders as set out in the draft order attached. In the alternative, the Claimant seeks an action on the Award.”
The Claimant put forward a draft order requiring the Defendants to transfer the Property to him or his nominee Mr Shimon Stern.
The issues to be decided
The overall question I have to decide is whether to make an order that the Defendants transfer the legal title to the Property to the Claimant or his nominee, Shimon Stern upon discharge of the existing mortgage. Effectively, I have to decide whether to give judgment in terms of the Award.
The legal issues that require consideration are:
a) Did the Beth Din have power to order the transfer of the Property? This raises a question as to the application of section 48(5) of the 1996 Act and whether it is too late to raise the objection to their powers;
b) Even if the Beth Din lacked power to make such an order, does the Court have such power?
c) Should the Court exercise its discretion under s66 to make the requested order? This includes questions going to workability, arbitrability and also new evidence served since the hearing.
Factual issues have arisen in the application and there are questions of Jewish law upon which expert evidence has been served. Both parties have served considerable evidence but neither asked for the opportunity to have cross-examination of witnesses. I made clear in my decision on 10 April 2019 that I could decide factual issues on a s66 application.
The Factual Background
The Property is a house that is currently split into three flats. The Claimant currently lives at the property, and has lived there since around late 1995. The Defendants are married and live on the same street in a different property. They are the current freeholders of the property.
The property was originally purchased by Mrs Rand's father as a gift to her on her marriage, and was transferred into Mr and Mrs Rand's joint names in around 1985 or 1986. At that stage the house was in two flats, but was split into three flats in 2010. At the date of the Award, a relative of Mr Rand's was said to be occupying the downstairs flat. A different tenant is said to occupy the top flat currently as a tenant of the Defendants. On 10 July 2007 the Defendants mortgaged the property for around £640,000. The mortgage was later transferred to another lender by a charge dated 19 May 2016. This is on the Land Register.
On around 19 March 2008 Mr Rand entered into a signed agreement with the Claimant. It was handwritten on a single side of paper in Hebrew. Both sides recognised that such an agreement is known as a Heskem and I have referred to it as such. It referred to a deed of trust through a solicitor. Mrs Rand did not sign the Heskem. The Defendants produced a manuscript translation of the agreement, and that translation was not disputed. It provided as follows:
“1) Shared ownership house
2) [Interest calculations]
3) The above refers to a sale of the house by deed of trust through a solicitor
4) After approximately 2 years [C] will take out a mortgage and [C] will repay [D1] the remaining money that [C owes] him on condition that [D1] closes the mortgage on the house
5) In the event that the above conditions are not met by either party there is a possibility that the sale is cancelled. But [C] will try if [he is] able to arrange a new mortgage for a new owner.
6) The £20,000 loan will remain until the shared ownership land is sorted out (either by selling or receiving planning permission) whereby the profits will be split and the loan will be repaid.
7) During these two years I [C] have the option of doing what I like with the house.”
The terms of the Heskem as found by the Award were for the Claimant to purchase the property for £745,000. The Beth Din concluded that, “With regard to the aforementioned mortgage of £640,000 because there would be a penalty on redeeming the mortgage within the first two years, it was agreed that title to the property would not pass formally to Mr Sterling but that instead he would take over responsibility for paying the mortgage, which he duly did. As for the shortfall of £105,000 between the sale price and the mortgage it was agreed to deal with this in the following manner (a) Mr Sterling paid the sum of £40,000 to Mr Rand and (b) having previously lent Mr Rand £45,000 to pay for wedding expenses, it was agreed that instead of repaying the loan, this sum could be retained by Mr Rand as part-payment for the Property”. The balance of £20,000 was effectively considered as part of the purchase price on the basis that the Claimant would be paying higher interest under the existing mortgage than he would have paid if he had taken out his own mortgage. As part of the Heskem it was agreed that although title was not being transferred to the Claimant immediately, Mr Rand would sign a declaration of trust stating that they held the property beneficially for the Claimant. It was also agreed that after two years the Claimant would raise a new mortgage, thereby discharging the Defendants' liability under the mortgage.
Some three months after the Heskem the Defendants entered into a signed deed of trust relating to the property. The deed was signed and witnessed. It was undated but referred to a transfer dated 25 March 1986 by which Mr Shimon Stern acquired the property for consideration and the Defendants held the property on trust...
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