Ashok Singh v Parminder Singh Jhutti
| Jurisdiction | England & Wales |
| Judge | Richard Williams |
| Judgment Date | 09 August 2021 |
| Neutral Citation | [2021] EWHC 2272 (Ch) |
| Docket Number | Case No: F30BM064 |
| Court | Chancery Division |
[2021] EWHC 2272 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BIRMINGHAM
Birmingham Civil Justice Centre
Bull Street, Birmingham B4 6DS
HHJ Richard Williams
(Sitting as a Judge of the High Court)
Case No: F30BM064
Hugh Jory QC (instructed by UK Law Solicitors) for the Claimant
Stuart Hornett and Tom Frazer (instructed by Trowers & Hamlins LLP) for the Defendants
Hearing dates: 22, 23, 24, 25, 26 February, 1, 2, 3, 4, 5, 15, 16, 17, 18 March 2021
Draft judgment circulated to the parties' legal representatives on 29 July 2021 by email.
His Honour Judge
Introduction
This is my judgment following the hybrid trial of liability only in connection with 26 properties (“ the Properties”), which were purchased in the names of Mr Parminder Singh Jhutti (“ D1”) and/or Mr Harmale Singh Jhutti (“ D2”), who are respectively father and son (together “ the defendants”).
The Properties were previously registered in the name of Mr Ashok Singh (“ C”) subject to mortgages with National Westminster Bank Plc (“ NatWest”), which on 21 July 2011 appointed Messrs Hunt and Judd of GVA Grimleys as Law of Property Act receivers (“ the Receivers”) over the Properties.
On various dates from December 2011 to April 2012, the defendants purchased the Properties (either directly from the Receivers or from associates of C, who had first purchased them from the Receivers). The total of the prices paid to the Receivers for the Properties was £2.25 million.
In summary, it is C's case that:
a. Prior to the appointment of the Receivers, C's close family and friends (including C's mother as well as D1 and his wife) invested significant amounts of money into the Properties (“ the Original Investors”). D1 and his wife had funds invested totalling £250,000;
b. C was the victim of the banking scandal when his monthly mortgage payments spiralled as a result of having been mis-sold interest rate hedging products by NatWest, which led to the appointment of the Receivers. C found out that the Receivers were about to auction the Properties with reserves well below what they were worth;
c. The Original Investors would have lost their investments if the Receivers sold the Properties at auction at an undervalue. Therefore, C obtained an injunction to restrain the Receivers from selling the Properties at auction. C approached family and friends (“ the Alleged Buy Back Consortium”), who offered to loan total funds of £935,00 to go alongside bank funding to purchase the Properties from the Receivers. The Alleged Buy Back Consortium included some of the Original Investors such as D1, who otherwise stood to lose their investments if the Properties were sold by the Receivers at auction. D1 offered to lend C the sum of £400,000;
d. NatWest insisted that any Properties purchased in more than one lot had to be purchased by a single nominated purchaser. As the acquisition was to be funded in part by bank finance, D1, who had the best credit rating, was chosen by C (in consultation with C's financial adviser) and agreed to act as representative for the Alleged Buy Back Consortium;
e. There was an oral agreement between D1 and C that D1 would sell the Properties back to C within 12 to 18 months of the acquisition and at the same price that D1 had paid for them. C's intention during the interim period was to renovate and then refinance the Properties in his own name so that he could apply the monies he raised against the Properties to –
i. repay the monies loaned by the members of the Alleged Buy Back Consortium; and
ii. give the Original Investors the options of either (1) being repaid the amounts of their original investments or (2) retaining their original investments in the re-acquired property portfolio.
f. As negotiations with the Receivers progressed and in order to provide some comfort to the Receivers, C arranged for third parties (including other members of the Alleged Buy Back Consortium), who had their own funds and so were not reliant upon bank funding, to purchase some of the Properties on the understanding that they would later be sold to the defendants and once adequate finance was in place.
g. As a result of continuing delays in obtaining bank finance in the name of D1 —
i. Bridging finance was required to complete the purchase/re-purchase of the Properties from the Receivers/third parties. It was the bridging companies that insisted that D2 act as co-representative in light of D1's age, and
ii. In order to reduce the amount of the required lending from the bridging companies, C arranged for the defendants to purchase by way of deferred consideration those Properties that had been acquired in the names of the other members of the Alleged Buy Back Consortium. Those members of the Alleged Buy Back Consortium agreed to lend the purchase monies to C and the defendants until such time as C was able to refinance the Properties in his name and thereby complete the rescue of the property portfolio;
h. The other members of the Alleged Buy Back Consortium sent their monies either directly to the conveyancing solicitors, Rubric Lois King (“ RLK”), to be used in the purchase of the Properties by the defendants or to the defendants' own bank account, which monies the defendants then paid on to RLK;
i. The oral agreement between C and the defendants was subsequently recorded and evidenced in a number of written agreements signed by the parties (“ the Disputed Agreements”) including in particular an agreement dated 6 January 2013 (“ the Sale Agreement”), which at the defendants' request extended the time for completion of the re-purchase of the Properties by C from the defendants to 12 months from the date of that agreement;
j. Following the acquisition of the Properties in the names of the defendants, they double-crossed C. They acted behind C's back to snatch the Properties for themselves and to prevent the sale back to C. As a result, the defendants obtained for themselves and their family a windfall potentially worth millions of pounds and notwithstanding that C and the other members of the Alleged Buy Back Consortium contributed some £650,000 towards the purchase and renovation of the Properties. By the time the extended period for C to complete the re-purchase from the defendants had come to an end, the Properties were worth considerably more than the defendants had paid for them and would have provided ample security to enable C to refinance the Properties into his name whilst also paying off the monies owed to the Original Investors and the members of the Alleged Buy Back Consortium; and
k. C seeks a declaration that the defendants hold the Properties for his benefit on a constructive trust subject to payment of the purchase price or in the alternative an order for specific performance of the Sale Agreement.
In summary, it is the defendants' case that:
a. D1 was never an Original Investor, although he did make a short term interest free loan of £200,000 to C to assist him with cash flow problems that C was then experiencing. D1 felt obliged to help C in his time of need since over several years C had without payment assisted D1 and his wife to buy and sell a number of single investment properties;
b. D1 sought repayment of the loan in order to use those monies, together with a credit facility he had obtained of £400,000 (also with NatWest), to invest in a property portfolio for the exclusive benefit of the defendants and their family. C was unable to repay the loan at that time, but rather offered to assist the defendants to purchase a property portfolio (including by negotiating with the Receivers, arranging bank finance, liaising with solicitors and managing the Properties on behalf of the defendants once acquired) as C had done in the past when D1 and his wife had purchased other investment properties albeit on a smaller scale. C explained to the defendants that the property portfolio belonged to a Mr Shiv Sharma, who had got into financial difficulties, and was being sold cheaply by receivers with whom he had contacts. C assured the defendants that the property portfolio represented a good buy notwithstanding that some of the properties were in a poor condition and needed renovating. The defendants trusted C, who was an experienced property developer;
c. C advised the defendants that they would urgently need to exchange contracts for the purchase of the property portfolio before bank finance was in place otherwise they would lose this valuable opportunity. Thereafter, there were delays on the part of C in securing bank finance, which resulted in:
i. Several of the Properties being initially purchased by associates of C on the understanding that the defendants would subsequently purchase those Properties from C's associates once adequate finance had been secured,
ii. The defendants had to take out short term (6 months) bridging finance to complete the purchase/re-purchase of the Properties from the Receivers/C's associates,
iii. Significant additional costs/expenses were incurred by the defendants and which by April 2012 stood at some £470,000 (including the costs of the bridging finance). C accepted that he was responsible for causing these additional costs/expenses, which he agreed should be added to his original debt of £200,000,
iv. C agreed to obtain funds from his associates to cover any shortfalls on completion, and on the basis that C would be responsible for paying back his associates and those payments would go towards reducing C's debt with the defendants,
v. C also agreed that C's debt be partly repaid by some of his associates transferring the Properties that they had purchased from the Receivers to the defendants without any payments being required and again C arranging to pay those associates back himself,
vi. The...
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