Abdul Majid Ali Muhammad and Others v Ary Properties Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Master Matthews |
| Judgment Date | 13 July 2016 |
| Neutral Citation | [2016] EWHC 1698 (Ch) |
| Docket Number | Case No: HC-2014-001664 |
| Court | Chancery Division |
| Date | 13 July 2016 |
[2016] EWHC 1698 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Master Matthews
Case No: HC-2014-001664
Gideon Roseman (instructed by Newhall Solicitors LLP) for the Claimants
Aidan Casey QC (instructed by Gresham Legal) for the Defendants
Hearing dates: 3 May 2016, 1 June 2016
Introductory
This is my judgment on an application by the First Defendant by notice dated 12 January 2016, by which it seeks orders for:
a. The Claimants' defence to the First Defendant's counterclaim to be struck out;
b. Judgment for the First Defendant on the counterclaim;
c. Costs of the application on the indemnity basis;
d. Alternatively, summary judgment for the First Defendant on the counterclaim;
e. Costs of the counterclaim.
The application is supported by the witness statement of Smeetesh Kakkad dated 11 January 2016, with one exhibit. It is, in part at least, opposed by a witness statement of Michael Baxendale, dated 27 April 2016. The application was heard by me on 3 May 2016, but the time allowed was not sufficient, and it had to be adjourned to 1 June 2016. Aidan Casey QC appeared for the First Defendant, and Gideon Roseman for the Claimants. At the hearing I referred to a published lecture by Lord Neuberger which I considered might be relevant to a point which had arisen, and after the hearing I emailed the parties to give them the opportunity to make a written submission in relation to it. As a result Mr Roseman made a written submission dated 8 June 2016. However, Mr Casey was not instructed to do the same.
This claim
The application arises in the context of a claim begun by claim form dated as long ago as 29 August 2014. The Claimants claim, amongst other things, (1) payment of AED 5 million (£846,134.60) pursuant to a judgment of the Dubai Court of First Instance dated 29 July 2013 or alternatively by way of informal loan contract, (2) rectification of the register of title to the property known as 2 Atlip Road, Wembley, Middlesex HA0 4LU ("the Property"), of which the First Defendant is the registered proprietor, and (3) possession of the Property pursuant to a legal charge dated in 2009. There are in fact two versions of this legal charge in evidence. Neither contains a more detailed date then "2009". For convenience, I will call them the "original 2009 charge" and the "altered 2009 charge".
The Particulars of Claim were not served with the claim form, but are dated 29 October 2014. The First Defendant made a request for further information, to which the Claimants responded on 27 January 2015. The amended defence and counterclaim of the First Defendant were filed and served on 9 September 2015. The First Defendant is in fact the only party to have filed a defence, and hence this application does not directly concern any other defendant. The counterclaim seeks a declaration that the altered 2009 charge is not valid or binding on the First Defendant, and an order that a unilateral notice registered on 28 July 2014 against the title of the Property be vacated. The Claimants filed a reply and defence to counterclaim on 9 October 2015. The Claimants also provided a voluntary clarification of the reply and defence to counterclaim on 3 November 2015. I will come back to these.
Background facts
A brief summary of the background facts is as follows. The Claimants are a father and two sons who carry on business in this country. The First Defendant is a company formed by and bearing the initials of the late Abdel Razzaq Yacoob ("ARY"), who died on 21 February 2014. His estate is the Second Defendant. His brother and his brother's son are the Fourth Defendant and the Fifth Defendant respectively, the Third Defendant is the partnership of which the First Defendant, the Fourth Defendant and the Fifth Defendant were formerly members, and of which only the Fourth Defendant and the Fifth Defendant remain. The Third Defendant used a number of corporate vehicles to carry on business in various countries, including the First Defendant. It is suggested in the papers before me (but there is nothing in evidence) that the First Defendant is the only defendant to have assets within this jurisdiction.
The Claimants' case is that they made loans in significant amounts of money to ARY from 2007 onwards. In September 2008 ARY asked for a further (short term) loan of AED 5 million (then about £850,000), and offered the Property as security. The Claimants agreed, and lent the money in September 2008. In summer 2009 the First Claimant met ARY at the Third Defendant's offices in Pakistan. The Claimants say that ARY produced a copy of a legal charge (the original 2009 charge) of the Property, which was in favour of an unrelated Seychelles company, Turquoise Holdings Ltd, and he and the First Claimant added the Claimants' names and the First Claimant's passport number to the document, as well as the sum of AED 7.4 million (in two places). Moreover, they say that ARY contacted a director of Turquoise Holdings Ltd, who consented to the alteration of the original 2009 charge to enable the Claimants also to take the benefit of it.
In January 2011, the Claimants not having been repaid, the First Claimant met ARY again in Pakistan and obtained the execution of a fresh charge of the Property in their favour ("the 2011 charge"). This charge however does not appear to have been registered against the title of the Property. In fact, the only charge that has been so registered is an apparently quite different charge, dated 20 August 2010, in favour of Turquoise Holdings Ltd, registered on 10 September 2010.
However, on 24 July 2014 the Claimants applied on Form UN1 for a unilateral notice to be entered on the register. The Form UN1 attaches a copy of the altered 2009 charge and relies on this to support the entry of the unilateral notice. It says (in box 12, para 5):
"In the premises the document herewith which was signed on behalf of the company [ie the First Defendant] by [ARY] grants a legal charge over the property to the Applicants."
The entry on the register reads:
"(28.07.2014) UNILATERAL NOTICE in respect of a charge dated in 2009 made between (1) Haji Abdul Razzak Haji Yacoob (2) Ary Properties Limited and (3) Turquoise Holdings Limited."
Procedure
It appears from the papers that the Claimants began this claim to try and obtain payment of the sums it says are outstanding, including by rectification of the register of the Property. In this application I am not concerned with the Claimants' claims. The counterclaim of the First Defendant (signed by Mr Casey) pleads that the original 2009 charge was a genuine instrument, but that the alterations made to it by the Claimants to give rise to the altered 2009 charge were not, and accordingly the altered 2009 charge was not a genuine instrument (para 55). There are allegations of dishonesty (para 56), but I can ignore those for the purposes of this application. The First Defendant also pleads (para 57) that the altered 2009 charge has not been executed by or on behalf of, and is not a valid instrument binding on, the First Defendant.
Para 59 of the counterclaim (so far as material) needs to be set out verbatim:
"In the premises:
a. [the First Defendant] is entitled to a declaration that the altered 2009 charge is not a valid instrument and/or is not binding on [the First Defendant];
b. [the First Defendant] is entitled to an order that the unilateral notice be vacated;
c. Without prejudice to the generality of the foregoing:
i. The Claimants had no reasonable cause to apply for the entry of the unilateral notice;
ii. The Claimants acted contrary to, and/or in breach of the duty imposed by section 77 of the Land Registration Act 2002 in seeking and obtaining the entry of the unilateral notice;
d. The entry of the unilateral notice acts as a blight on the Property (which [the First Defendant] wishes to sell), and/or as a clog on its marketability, and the Claimants will be liable to [the First Defendant] for any loss and damage that may be caused thereby pending its vacation …"
In the prayer, the First Defendant claims both a declaration that the altered 2009 charge is not a valid instrument and/or is not binding on the First Defendant, and an order that the unilateral notice be vacated, as well as "further or other relief" and costs.
The Claimants' Reply to the amended Defence and defence to counterclaim of the First Defendant is dated 9 October 2015. It was not signed by counsel, and was evidently drafted by the Claimants' solicitors. It consists of eight short paragraphs, four for the Reply, and four for the defence to counterclaim. The latter read as follows:
"5. Paragraph 54 of the counterclaim is admitted, in that the Claimants sought and obtained the entry of the unilateral notice, but not that the Claimants had in any sense improperly altered the 2009 Charge.
6. The express and implied implications of dishonesty made at paragraphs 55 and 56 of the counterclaim are strenuously denied.
7. Paragraph 58 of the counterclaim is admitted, in that the Claimants do not agree to vacate the unilateral notice, but is denied as to the balance of that paragraph.
8. The entitlement to relief claimed at paragraph 59 of the counterclaim and in the Prayer to the counterclaim is denied."
It will be noted that there is no pleading as to para 57 of the counterclaim (altered 2009 charge not executed by or on behalf of, and not a valid instrument binding on, the First Defendant).
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