Anglo-Eastern Trust Ltd v Kermanshahchi
| Jurisdiction | England & Wales |
| Judge | Mr Justice Park,Lord Justice Mance,Lord Justice Brooke |
| Judgment Date | 22 February 2002 |
| Neutral Citation | [2002] EWCA Civ 198 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2001/1601 QBCMI; A3/2001/1601A FC2 |
| Date | 22 February 2002 |
[2002] EWCA Civ 198
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
HH Judge Hegarty QC
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Brooke
Lord Justice Mance and
Mr Justice Park
Case No: A3/2001/1601 QBCMI; A3/2001/1601A FC2
Michael Ashe QC & James P Roberts (instructed by Arnander Irvine Zietman) for the Appellant
Peter Smith QC & Andrew Latimer (instructed by Boote Edgar Esterkein) for the Respondent
| Part | Para |
| 1 Overview | 1 |
| (i) The facts giving rise to the dispute | 7 |
| (ii) Is it improbable that Mr Kermanshahchi's defence will succeed? | 14 |
| 2. What order should the judge have made?—Introduction | 19 |
| 3. What should the court do if it is minded to make a conditional order, but it appears to it that the defendant will not be able to raise the money to comply with it? | 22 |
| 4. What evidence ought this court to consider on the question of whether Mr Kernamshahchi will or will not be able to comply with Judge Hegarty's order? | 27 |
| 5. How should the court evaluate the evidence which it does consider? | 45 |
| 6. Having evaluated the evidence, what order should the court make? | 58 |
Overview
In this judgment I refer to the first claimant, Anglo-Eastern Trust Limited, as A-ET.
In April 2001 A-ET commenced an action against Mr Kermanshahchi claiming repayment of loans which it said it had made to him between 1993 and 1997. It said that it had demanded repayment but Mr Kermanshahchi had not repaid. The total amount of loans alleged to have been made was over £850,000, and A-ET's case was that, with interest, the total debt was approaching £1.4m. A-ET applied for summary judgment under Part 24 of the Civil Procedure Rules. Mr Kermanshahchi opposed the application, and it was heard by His Honour Judge Hegarty, sitting as a High Court judge.
The judge refused to grant summary judgment. His reason was that, expressing it in the double negative which is appropriate given the wording of CPR r24.2(a)(ii), he did not consider that Mr Kermanshahchi had no real prospect of successfully defending A-ET's claim. A-ET has not appealed against that aspect of the judge's decision. However, the judge did make a 'conditional order', by which he ordered Mr Kermanshahchi to pay into court £1m, and further ordered that, if Mr Kermanshahchi did not make the payment within 28 days, his defence would be struck out and A-ET would be at liberty forthwith to enter judgment in default of a defence. Mr Kermanshahchi has appealed against the judge's order in that respect, and the appeal has now come before this court.
On behalf of Mr Kermanshahchi Mr Ashe QC and Mr Roberts have advanced two arguments. First they submit that the circumstances in which it may be proper for a conditional order to be made are not present. Those circumstances are (in words taken from paragraph 4 of the Practice Direction to Part 24 of the CPR): 'where it appears to the court possible that a.. defence may succeed but improbable that it will do so'. Judge Hegarty considered that, although there was sufficient merit in Mr Kermanshahchi's defence for him to refuse to give summary judgment in favour of A-ET there and then, nevertheless it was improbable that the defence would succeed. Mr Ashe and Mr Roberts submit that the judge was wrong in that respect. I disagree. In my judgment the judge was entitled to take the view that it was improbable that the defence would succeed, and I would not allow the appeal on this first ground.
The second submission of Mr Ashe and Mr Roberts is that, even if the circumstances were such that, under the terms of the Part 24 Practice Direction, the judge could make a conditional order, nevertheless in the circumstances of this case he ought not to have made one, because the effect of the order was to stifle the defence. In large measure I agree with this, and I consider that the judge's order should not be allowed to remain as it presently stands. However, for reasons which I will explain later, I also consider that Mr Kermanshahchi should not be allowed to defend the claim without putting up some amount which it is realistic to believe that he will be able to raise, and which will demonstrate that he is serious in his defence. I would vary the judge's order by substituting £75,000 for his amount of £1m.
I should also mention in this overview that there was a substantial dispute about evidence. Mr Kermanshahchi had not put any evidence about his means before Judge Hegarty. Ought this court now to consider evidence to the effect that Mr Kermanshahchi could not afford to pay £1m into court? The court ruled that, for the reasons which I will describe below, the evidence should be admitted and taken into account in this hearing.
(i) The facts giving rise to the dispute
A-ET is an English company wholly owned by Sir David Alliance CBE. Sir David was born in Iran, but came to this country in (I think) the early 1950s. He has had a long and successful business career, particularly in the field of textiles. He has achieved many distinctions, including being knighted in 1989.
Mr Kermanshahchi was also born in Iran. He is now 70 years old. He was a member of a prosperous Jewish family. He came to this country, at least partly for the purposes of study, in 1949. One of his witness statements says that he met Sir David in 1950, and the two of them became friends. He returned to Iran in 1956 to join the family businesses. By the 1960s and 1970s he and his three brothers owned large industrial and property interests, and on his own account, which I see no reason to doubt, he was a very wealthy man. However, in 1979 there occurred the Islamic revolution in Iran. Mr Kermanshahchi happened to be out of the country at the time, and he has not gone back since. The family wealth, in so far as it was located in Iran, was lost. From 1979 Mr Kermanshahchi has lived mainly in England. He has had a number of business and property interests, but nothing on the scale of his earlier years in Iran. He says in one of his witness statements that he decided to retire in about 1990. He and his wife have a flat in Highgate (of which more later). They also rent an apartment in Monaco where they spend some of their time.
In the early 1990s Mr Kermanshahchi and two of his brothers owned an undeveloped plot of land in Israel. They were planning to have apartment blocks constructed on it. Mr Kermanshahchi was expecting to emerge as the owner of nine apartments. In early 1993 he came to an agreement with Sir David the nature of which is fundamentally disputed between them in the present proceedings. The agreement was not made in writing. It certainly had something to do with the Israel project, and it certainly led to sums of money being paid to Mr Kermanshahchi over a number of years. There appear to have been 33 payments made at irregular intervals between March 1993 and March 1997. They were of varying amounts, the largest being £100,000 and the smallest being £10,000. As I said in the overview they appear to have aggregated to over £850,000. Two of the payments (the earliest two) were made by Sir David. The others were made by A-ET. If interest falls to be added to them the combined total by now would certainly be over £1m, and would be a good deal more if interest was calculated on a compound basis.
Sir David and A-ET say that the payments were interest-bearing loans to Mr Kermanshahchi, and that he is liable to repay them. Mr Kermanshahchi's case is that the payments were not loans at all. Rather they were outright payments for the forward purchase by Sir David of three of the nine Israeli apartments which would come to be owned by Mr Kermanshahchi when the construction project was completed. Mr Kermanshahchi also says that, whatever the nature of the agreement, it was made between him and Sir David, not between him and A-ET. Therefore, Mr Kermanshahchi argues, if he owes anything he does not owe it to A-ET, and this claim has been brought by the wrong claimant.
In the event the construction project has not progressed as successfully as Mr Kermanshahchi had hoped. I believe that the apartments have been constructed, but they are heavily charged to a bank. Mr Kermanshahchi has not transferred any apartments to Sir David, but he has given Sir David a power of attorney which effectively vests management control in Sir David in so far as it is in Mr Kermanshahchi's power to bring that about. There are arguments about whether this is consistent with Sir David trying to protect A-ET's position as creditor of a loan which had gone wrong (which is what he and A-ET say), or whether it is more consistent with Sir David having intended to become an equity investor in the property development project (which is what Mr Kermanshahchi says).
There are many other detailed factual aspects of the case which emerge from the witness statements and supporting documents which we have before us. Some of the further facts are clear and undisputed; others are not. I do not propose to go into the facts in further detail here, although in the next section of this judgment I shall say something about certain letters which may be important. What I have said already is sufficient at this stage. In any event the case is going to go to trial where all factual issues will be at large and will be investigated fully.
I should conclude this summary of the factual background by recording that in March and April...
To continue reading
Request your trial
-
Vadim Don Benyatov v Credit Suisse Securities (Europe) Ltd
...funds, but that no such funds would be made available to it” (see [46]–[47]); (3) Males L.J. cited (at [53]) a passage from Anglo-Eastern Trust Ltd v Kermanshahchi [2002] EWCA Civ 198, in which Brooke L.J. had stated that, where an applicant for summary judgment applied in the alternative ......
-
Grenda Investments Ltd v Philip Barton
...should be imposed. Had I considered that a condition should be imposed, I would have adopted the approach which was described in the Anglo Eastern Trust case ( [2002] EWCA Civ 198) and would have deferred consideration of Mr Barton's ability to comply with any condition. I had submitted to......
-
Lambert and Others v Barratt Homes Ltd and another
...the upper part of the drainage ditch which remained on their retained land. As Jonathan Parker LJ said in Green v Lord Somerleyton [2002] EWCA Civ 198 at paragraph 81, in the context of the English landscape a distinction between “natural” and “artificial” features is an inherently uncerta......
-
Industrial and Commercial Bank of China Ltd, Mumbai Branch v Anil Dhirajlal Ambani
...as well. I agree with that proposition. 27 The Defendant has pointed to the earlier decision of the Court of Appeal in Anglo-Eastern Trust Ltd. & Another v Kermanshahchi [2002] EWCA Civ 198. It needs to be mentioned that this was a case where the Court of Appeal disagreed that the judge wa......