Anglo Financial SA and Another v Stephen Jonathan Goldberg
| Jurisdiction | England & Wales |
| Judge | Mr Justice Roth |
| Judgment Date | 07 October 2014 |
| Neutral Citation | [2014] EWHC 3192 (Ch) |
| Docket Number | Case No: HC14E03117 |
| Court | Chancery Division |
| Date | 07 October 2014 |
[2014] EWHC 3192 (Ch)
The Honourable Mr Justice Roth
Case No: HC14E03117
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Jeffrey Littman (instructed by Waller Pollins Goldstein) for the Claimants
Mr Clive Freedman QC (instructed by Teacher Stern LLP) for the Defendant
Hearing dates: 18–19 September 2014
Introduction
On 11 August 2014, Asplin J made a freezing order against the Defendant, Mr Stephen Goldberg, in the amount of £1.6 million. As is often but not invariably the case, that application was heard without notice. From the note of the hearing, it is clear that the Judge regarded this as a borderline case on risk of dissipation of assets, in the light of the considerable delay, and was only just persuaded to make the order.
The Claimants apply to continue the freezing injunction. That application is opposed and there is also a cross-application by Mr Goldberg to discharge the injunction, although it expires in any event at the conclusion of this hearing.
The return date of the original injunction was 21 August 2014, when the matter came back before Peter Smith J. Both sides were then represented and it was agreed that a full day's hearing was required, with further time for evidence. The Judge therefore continued the injunction to an adjourned hearing to be held between 18–23 September, and directed that Mr Goldberg file and serve his evidence by 4pm on 3 September and the Claimants file and serve any evidence in reply by 4pm on 11 September.
Mr Goldberg asked for an extension from the Claimants of 24 hours and served his evidence at about 5pm on 4 September. The Claimants had adopted in correspondence the position that in return for that extension they required an extension of 72 hours. However, they sought to serve an additional witness statement only on 16 September, followed by the exhibit on 17 September, the day before the hearing. Mr Littman, who appeared for the Claimants on this application as he had at the original without notice hearing, frankly accepted that no good excuse could be put forward for the late service, for which he could only apologise. But if that late evidence were admitted, it would mean that Mr Goldberg would not have an opportunity to file any evidence in response to the quite serious allegations being made. I regard it as wholly unsatisfactory that a claimant who has obtained a freezing order from the Court on a without notice application, which of its nature places a defendant under considerable pressure, should then conduct itself in that way. The timetable set out in Peter Smith J's order was clearly designed to enable both sides to take full account of each other's evidence. With the agreement of Mr Freedman QC, appearing for Mr Goldberg, I admitted that evidence de bene esse, on the basis that Mr Freedman could respond on instructions to the new factual material being put forward.
Background
The First Claimant ("Anglo") is a Panamanian company and the Second Claimant ("Fortis") is a Delaware corporation. The controlling mind of both companies appears to be Mr Louis Kestenbaum, who lives in New York City. It is Mr Kestenbaum who represented the Claimants in the transactions which give rise to the present claim and who gives evidence on their behalf. Both Claimants appear to be engaged in making financial transactions, i.e. advancing loans, often for short periods at high rates of interests.
Mr Goldberg is a solicitor and now works as the in-house solicitor for his family's company that is engaged in property investments in the United Kingdom, Northern & Midland Holdings Ltd ("N&M"). However, at the material time and until about 2010, he was in independent practice. From 1998-October 2007 his firm was called Goldberg Linde. Mr Carl Linde was the other partner until September 2003 and subsequently acted as a consultant to the firm. Over that time, Mr Linde became less engaged in legal work as he concentrated more on assisting his clients with management of their assets. For that purpose, Mr Linde used a company called Fidex Asset Management SA ("Fidex"), incorporated in Luxembourg, and other companies bearing the "Fidex" name. Mr Goldberg also had some involvement with Fidex and signed loan agreements on its behalf. His connection is also indicated by the fact that in October 2007, Mr Goldberg ceased to trade as Goldberg Linde and practised thereafter as Fidex Law.
The other key individual to feature in the story is Mr Robert Hirsch, who is resident in Switzerland. He operated what is described by Mr Kestenbaum as a trustee/fiduciare business through a company called Maverick Conseil SA ("Maverick") and also controlled a Swiss firm, Hirsch & Cie. Mr Hirsch became a business associate of Mr Linde, in that they were involved together on a number of transactions.
From Mr Kestenbaum's evidence, it appears that from the year 2000 onwards Mr Linde introduced him to a number of financing opportunities and that Mr Kestenbaum's companies made a series of loans to clients of Mr Linde or Fidex, which were all repaid without a problem. Mr Kestenbaum came to trust Mr Linde and a close friendship developed between them. Mr Linde also introduced Mr Kestenbaum to a number of other investment opportunities, including a dot. com business venture.
For legal work in England, Mr Kestenbaum's companies used Goldberg Linde/Fidex Law as their principal legal advisors. Mr Kestenbaum came to know Mr Goldberg very well and states that they became friends: he was introduced to Mr Goldberg's father and went to Mr Goldberg's daughter's engagement party. In the Particulars of Claim, their relationship is described as a "close friendship". Mr Kestenbaum says, and I accept, that he came to trust Mr Goldberg as he did Mr Linde.
The Claim
The claims against Mr Goldberg by Anglo and Fortis are distinct and need to be described separately.
Anglo
The claim by Anglo concerns two loan transactions made, respectively, in January 2007 and February 2008.
The January 2007 loan was initially made to Maverick, supposedly a client of Fidex, and subsequently by novation the borrower became Brevard Ltd, a British Virgin Islands ("BVI") company, described in the loan document as a client of Fidex with its office in Geneva. The loan (the "Brevard loan") was for £1 million and was periodically extended. The final extension was by written agreement dated 4 August 2008. The loan matured on 4 February 2009 when it was repayable with fixed interest of £260,000. The "Borrower" is defined in the loan agreement and related promissory note as comprising not only Brevard Ltd but also its sole corporate director, LZ Nominees Ltd ("LZ Nominees"), and Fidex. The Brevard loan is signed by Mr Goldberg along with Mr Linde on behalf of LZ Nominees.
The February 2008 loan is pleaded by the Claimants as being made to a company called New Sales Ltd. However, from the loan documentation before the Court it seems that New Sales Ltd was borrowing jointly with Mr Hirsch personally. The agreement is entered into between Anglo as lender and Fidex and Hirsch & Cie as agents. New Sales Ltd is stated to have the same corporate address in Lausanne as Hirsch & Cie. This loan (the "New Sales loan") was for £1.375 million. The New Sales loan was also extended, eventually by an agreement dated 4 August 2008 with a related promissory note. The maturity date under those documents was the same as for the Brevard loan, i.e. 4 February 2009. The loan was repayable with fixed interest of £357,500. The "Borrower" is defined in the loan documents as comprising not only New Sales Ltd and Mr Hirsch but also Fidex and Hirsch & Cie. It is signed by Mr Goldberg along with Mr Linde, this time on behalf of Fidex, and by Mr Hirsch on behalf of himself personally and for Hirsch & Cie.
The promissory notes relating to both the Brevard loan and the New Sales loan contain an identical term that in the event of default, interest will accrue "at the highest rate permitted by law."
Anglo asserts in the Particulars of Claim (at para 16) that neither the Brevard loan nor the New Sales loan, nor the stipulated interest, was paid on maturity on 4 February 2009 or at any time since.
Both loan agreements contain a number of warranties made by the "Borrower":
a) clause 4C of the Brevard loan provides that the amount on deposit at the Borrower's specified bank account at ING Wolvendael in Brussels exceeds £2 million and "will at all times until the Note is paid and discharged in full exceed the Loan Value", which in turn is defined as being £2 million.
b) clause 4C of the New Sales loan is in similar terms save that the account there specified is with Clariden Leu Bank in Zurich and the minimum amount and Loan Value is stated to be £2.75 million.
Central to the claim against Mr Goldberg is clause 4B. Although the Particulars of Claim is framed on the basis that the terms of this clause are identical as regards Mr Goldberg in both agreements, that is not correct, as Mr Littman accepted when that was pointed out in the course of argument.
In the New Sales loan, clause 4B provides:
"The Borrower hereby represents, warrants, attests, declares and covenants and agrees as follows:
…
B. …The Signatories hereto, Carl Linde, Esq., Stephen Goldberg, Esq, and Robert Hirsch are the sole signatories on the Account and will remain so until all amounts due and arising under the Note have been unconditionally and irrevocably paid and discharged in full. The Signatories hereto unconditionally warrant jointly and severally that they will not take any action with respect to the Account in contravention of the terms of this Agreement, and assume...
To continue reading
Request your trial
-
Alexander Brothers Ltd (Hong Kong S.A.R) v Alstom Transport SA
...the real evil is in the “tucking away” of material in exhibits, or in other witness statements (as in Anglo Financial S.A. v Goldberg [2014] EWHC 3192 (Ch)). Here the material was in the main witness statement. The story both of repayment, and of the reason why repayment was happening, were......
-
Ammar Al Assam v Dimitrios Tsouvelekakis
...As regards delay, the significance of any delay will depend upon the individual facts of each case ( Anglo Financial SA v Goldberg [2014] EWHC 3192 (Ch) at [53]; Fiona Trust Holding Corpn. v Privalov [2007] EWHC 1217 (Comm) at [70]). (4) The mere fact that an application is made on notice......
-
Ras Al Khaimah Investment Authority and Others v Bestfort Development LLP and Others
...has been considerable delay here. I agree that the explanation put forward by the Applicants for delay is very weak. In Anglo Financial S A and another v Goldberg [2014] EWHC 3192 (Ch) Roth J noted that the significance of delay will vary greatly from case to case. It is important to consid......
-
1) Ras Al Khaimah Investment Authority and Others (Appellants v 1) Bestfort Development LLP and Others
...56 Nevertheless relief is often denied to an applicant who pursues his rights in a dilatory fashion; it was denied by Roth J in Anglo-Financial S.A. v Goldberg [2014] EWHC 3192 (Ch) where there had been several years of negotiation about the matters in dispute before an injunction was appli......