Ahuja Investments Ltd v Victorygame Ltd
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 26 August 2021 |
| Neutral Citation | [2021] EWHC 2382 (Ch) |
| Docket Number | Case No: BL-2019-001003 |
| Court | Chancery Division |
[2021] EWHC 2382 (Ch)
His Honour Judge Hodge QC
Sitting as a Judge of the High Court
Case No: BL-2019-001003
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building,
Fetter Lane,
London,
EC4A 1NL
CONTRACT – Purchase of commercial investment property – Fraudulent misrepresentation – Inducement — Breach of contract – Rectification – Penalties — Damages
EVIDENCE – Effect of failure to call relevant witnesses – Adverse inferences – Proper approach to evidence
The following cases are referred to in the judgment:
Cargill International Trading PTE Ltd v Uttam Galva Steels Ltd [2019] EWHC 476 (Comm)
Cavendish Square Holdings BV v Makdessi [2015] UKSC 67, [2016] AC 1172
Ceylon (Government of) v Chandris [1965] 3 All ER 48
ECO3 Capital Ltd v Ludsin Overseas Ltd [2013] EWCA Civ 413
Efobi v Royal Mail Group Ltd [2021] UKSC 33, [2021] 1 WLR 3863
FoodCo UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch)
FSHC Group Holdings Ltd v GLAS Trust Corp Ltd [2019] EWCA Civ 1361, [2020] Ch 365
Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)
Hayward v Zurich Insurance Company Plc [2016] UKSC 48, [2017] AC 142
Holyoake v Candy [2017] EWHC 3397 (Ch)
Lewis v Yeeles [2010] EWCA Civ 326
Magdeev v Tsvetkov [2020] EWHC 887 (Comm)
Monsolar IQ Ltd v Woden Park Ltd [2021] EWCA Civ 961
The ‘Panaghia Tinnou’ [1986] 2 Lloyd's Rep 586
Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386, [2006] 2 Lloyd's Rep 511
Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413, [2019] 4 WLR 112
Strover v Harrington [1988] Ch 390
Victorygame Ltd v Ahuja Investments Ltd [2021] EWCA Civ 993
Vivienne Westwood Ltd v Conduit Street Development Ltd [2017] EWHC 350 (Ch), [2017] L & TR 23
Williams v. Natural Life Health Foods Limited [1998] 1 WLR 830
Wisniewski v Central Manchester Health Authority [1998] PIQR 324
Mr David Holland QC and Mr Edward Rowntree (instructed by Cardium Law Limited) for the Claimant
Mr Ian Clarke QC and Mr Nicholas Trompeter QC (instructed by SBP Law) for the Defendants
Hearing dates: 1 – 2, 5 – 9, 13 – 14 July 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hodge QC
Judge Hodge QC:
I: Introduction and background
In his farewell speech from the Delhi High Court, Justice J.R. Midha is reputed to have said that: “In the Court of Justice, both the parties know the truth; it is the judge who is on trial.” Never has that perceptive observation resonated more fully with me than in the present case, where both parties have signally failed to assist the court by calling evidence from three highly relevant potential witnesses, in breach of their duty under CPR 1.3 to help the court to further the overriding objective to deal with the case justly and at proportionate cost. As a result, this is not so much a case of “Hamlet without the Prince” as one of Hamlet without any of Polonius, Gertrude or Laertes (or Rosencrantz and Guildenstern without Hamlet, Claudius or the Player).
This is my judgement on the trial of a claim, issued on 23 May 2019, for damages for two sets of fraudulent, or alternatively negligent, misrepresentations allegedly made to the claimant by the defendants during the course of the sale by the first defendant to the claimant of a commercial investment property in West London. There is also a parallel claim for damages for breach of contract. The value of the primary claim is said to be in excess of £8.776 million (less the sum of £800,000 advanced under a loan agreement which the claimant entered into with the first defendant on completion of the sale together with £24,000 for interest which had fallen due under the loan agreement before its purported rescission and which remains outstanding). The defendants deny any and all liability to the claimant. The first defendant counterclaims for: (1) a declaration as to the true interpretation, alternatively rectification, of the sale contract; (2) the recovery of monies due under both the sale contract and the loan agreement and/or two dishonoured cheques; and (3) an injunction requiring the claimant to provide, or to procure the provision of, certain security for moneys due under the loan agreement.
The trial took place over nine court days between 2 and 14 July 2021. The claimant is represented by Mr David Holland QC leading Mr Edward Rowntree (of counsel). The defendants are represented by Mr Ian Clarke QC leading Mr Nicholas Trompeter QC.
For structural reasons, this judgment is divided into a number of sections as follows: I: Introduction and background II: Evidence and trial III: The witnesses IV: The rental schedule and the lease term representation V: The contractual claims VI: The statutory declaration VII: The loan agreement VIII: The expert evidence IX: The counterclaim X: Conclusions. However, each section of this judgment has informed the other sections.
During the course of this trial, a great many matters have been raised and developed during the course of counsels' extensive written and oral submissions which, as the evidence and the case have developed, and in the light of my findings, I find it unnecessary to record or address in this judgment. The fact that they do not feature expressly in this judgment does not mean that they have been overlooked.
This case arises out of the sale and purchase of a freehold investment property known as The Himalaya Shopping Centre and situated at Nos 65 and 67 The Broadway, Southall, Middlesex, UB1 1JR ( ‘the property’). The claimant, Ahuja Investments Limited ( ‘Ahuja’), was the buyer. It was incorporated with the specific purpose of acquiring the property on 12 February 2016. Its sole director was and is Mr Joginder Singh ( ‘Mr Singh’); and he (and members of his extended family) are the ultimate beneficial owners. The first defendant, Victorygame Limited ( ‘Victorygame’), was the seller. The second defendant, Mr Surjit Singh Pandher ( ‘Mr Pandher’), is and was the controlling director of Victorygame, which is a company owned by members of his family. The native language of both Mr Singh and Mr Pandher is Punjabi and it was in that language that they communicated with each other and with their professional advisers, although all written communications were in English.
Ahuja and Victorygame exchanged contracts for the sale and purchase of the property on 1 March 2016. The transaction completed over two years later, on 22 August 2018. Ahuja did not have all the funds it required to complete the purchase so on the day fixed for completion, Ahuja and Victorygame entered into a loan agreement under which the latter advanced the sum of £800,000 to the former to assist with the purchase.
Ahuja claims that it was induced to enter into the sale contract, and the later loan agreement, by fraudulent (alternatively negligent) misrepresentations about the duration of the leases of the retail units on the ground floor of No 65 and the rental income from the tenants. It is common ground that a schedule was provided to Ahuja's solicitors, and became incorporated into the sale contract, which stated, in capitalised, red text, that “ALL TENANTS HAVE SIGNED A 15 YEARS LEASE FROM THE 20/2/15” when, in fact, the substantial majority of the leases were for 6 years 9 months and not all of them ran from that date. This is referred to as “the lease term representation”.
The defendants accept that there was a misrepresentation, which they say was due to an innocent mistake; but they deny that there was any operative inducement. They contend that Ahuja knew the true terms of the leases prior to the exchange of contracts for a number of reasons, one of which is that the original leases were in the possession of Ahuja or its solicitors for around two months between February and April 2016 (which spanned the exchange of contracts). It is common ground that the leases had been provided to Mr Jagjit Sohal (of Monarch Commercial Property Consultants), Victorygame's selling agent, and that he then delivered them to Ahuja's solicitor, Mr Randeep Jandu (of Stradbrooks). The defendants contend that it should be inferred that, before they were scanned and returned to Victorygame's then solicitors (Chhokar & Co, acting by Mr Olabode Fagbemi), Mr Jandu had inspected the leases and had discussed them with his client. Further or alternatively, the defendants invite the court to infer that Mr Jandu had told his client that he had not inspected the leases, and did not know about the lease terms, and that Mr Singh instructed him to proceed to exchange of contracts on the purchase in any event because he was not concerned about the terms of the various leases.
Sadly, there was no evidence before the court from any of Mr Sohal, Mr Jandu, or Mr Fagbemi. On 8 June 2021, Mr Robin Vos (sitting as a Deputy Judge of the High Court) delivered a judgment upholding a claim to legal professional privilege made by Ahuja over correspondence passing between its current solicitors, Cardium Law, and its former solicitors, Stradbrooks, reversing a decision of the Master, on 29 April 2021, to order disclosure of two documents comprising: (1) a letter of claim from Cardium Law to Stradbrooks dated 10 February 2020, and (2) a letter of response dated 19 December 2020 from Stradbrooks' professional indemnity insurers....
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