Balbir Singh Chaggar v Raghbir Singh Chaggar
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morris |
| Judgment Date | 18 May 2018 |
| Neutral Citation | [2018] EWHC 1203 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: A90BM257 |
| Date | 18 May 2018 |
[2018] EWHC 1203 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
Mr Justice Morris
Case No: A90BM257
Richard Wilson QC and James Weale (instructed by Shakespeare Martineau LLP) for the Claimant
Edward Pepperall QC and Marc Brown (instructed by Freeths LLP) for the First Defendant
The Second Defendant did not appear
Hearing dates: 10, 11, 12, 13, 14, 21 July 2017
Judgment Approved
(A) Introduction
The nature of the case
In this action, commenced on 30 October 2014, the claimant, Mr Balbir Singh Chaggar (“Balbir”) claims contractual sums, specific performance, and damages for breach of contract against the first defendant, Raghbir Singh Chaggar (“Raghbir”) and against the second defendant Hi-Tech Autoparts Limited (“the Company”). Balbir and Raghbir are brothers and at all material times they were directors and shareholders in the Company, which carried on business in the manufacture and sale of automobile parts. They were also partners in a property business, Delta Properties Partnership (“Delta”).
Balbir's claim arises out of a written agreement dated 25 April 2012 (“the Agreement” or “the ISA”), which, effectively, he seeks to enforce. The Agreement was entered into following a dispute between the two brothers concerning the operation and assets of the Company. In broad terms, the Agreement provided that the interests of Balbir and his wife in the Company and in Delta would be bought out for the sum of £1.6 million payable in instalments. In addition Balbir was to receive £60,000 by way of dividends, following which Balbir would give instructions to unfreeze the Company's bank account. The Agreement further contemplated that a more detailed settlement agreement (referred to as the “SA”) was to be concluded by the parties. Following the Agreement, Balbir was paid the £60,000 and the bank account was unfrozen. However, thereafter the parties did not agree the SA, the interests of Balbir and his wife in the Company were not transferred and they did not receive contractual sums said to be due under the Agreement. Balbir now seeks payment of the substantial part of those contractual sums. Raghbir contends that he is not bound by the Agreement for a number of reasons set out in paragraph 14 below.
The structure of this judgment
In the rest of this section (A), further background is set out, including the parties, the terms of Agreement itself, the parties' contentions are summarised and the five issues are identified. The section concludes with an outline of the facts. Section (B) sets out the parties' contentions in more detail. Section (C) addresses the evidence before the Court. Section (D) is a detailed factual chronology, including certain findings on disputed issues of fact. Section (E) then goes on to discuss and analyse each of the five issues. My conclusions are set out at paragraph 276 below.
The parties and their families
Balbir is now aged about 67. Hardev Kaur Chaggar is his wife. He has two sons: Manveer Singh, who had been married to Sumeet, and Sukhdeep.
Raghbir is Balbir's younger brother. Valvinder Kaur Chaggar is his wife. He has two sons: Kiran Chaggar (also known as Chubby) and Gaggandave (also known as Dave or Sunny). Gaggandave was married to Rakhee Sethi. Her father is Harbinder Sethi.
The Company was incorporated in 1983. Balbir and Raghbir had another brother Jasbir, who was also formerly involved in the Company. He died in 2004 and in 2005 Balbir and Raghbir purchased his shares in the Company for a total consideration of in the region of £1.6 million. From that time on, the Company was effectively owned and run 50/50 by the two brothers and their respective families. Balbir's 50% share was held as to 33.3% by him (20 shares) and as to 16.7% (10 shares) by Hardev Chaggar. Raghbir's 50% share was held as to 33.3% (20 shares) by him, as to 6.7% (4 shares) by his wife and as to 10% (6 shares) by Kiran. Kiran started work with the Company in January 2007 and became part of senior management in 2010. The Company entered administrative receivership in June 2014. That receivership was completed on 26 August 2016. The Company has no assets.
As regards Delta, Balbir and Raghbir owned a number of commercial investment properties which were operated through that partnership.
Others
At the material times, the Company and Delta banked with the Yorkshire Bank (“the Bank”), part of the Clydesdale Bank. Until late 2012, Paul Elliott was the manager at the Bank dealing with the Company's and Delta's affairs.
Deepak Johar is a solicitor who at the relevant time was carrying on in practice under the name Johar & Co. He was a family friend of the two brothers, and had dealt with their legal affairs for many years. He was particularly close to Raghbir. There is an issue of fact as to the capacity in which he was acting during the course of the relevant events in April and May 2012.
Rishi Chandarana, was a director of BPC Chandarana & Co. Limited, which at material times was the Company's accountants and advised the brothers, in particular, as to the structure of a possible buy-out previously discussed in 2011 and early 2012.
Clarke Wilmott is a firm of solicitors, who at material times acted for Balbir. In particular, Simon Thomas, managing director of that firm, and Desmond Carr, an associate, were involved in relevant negotiations. Subsequently in the course of events, Balbir instructed other legal representatives, Gateley and a direct-access barrister. Wragge & Co is a firm of solicitors, who at material times acted for Raghbir. In particular Andrew Nugent Smith of that firm was involved in negotiations. Subsequently, the firm of Freeths LLP started acting for Raghbir.
The Agreement
The Agreement provided as follows:
“ Initial Settlement Agreement dated 25 April 2012
The signatories to this agreement hereby agree as follows:
1. Hi-Tech Auto Parts Limited (company number 01770948) (Hitech) hereby agrees pay to Balbir Singh Chaggar (BSC) £60,000 on signature of this agreement, by way of dividend payments to the extent it is lawfully able to do so, on condition the bank accounts of Hitech and Delta Properties Partnership (Delta) are unfrozen and BSC and Raghbir Singh Chaggar (RSC) agree to write as directors of Hitech and partners in Delta to the bank in the following terms:
“We hereby authorise you to unfreeze with immediate effect the above accounts and pay Balbir Singh Chaggar by transfer into his account (BS & HK Chaggar, Sort Code 05 05 67, Acc No 45138236) the sum of £60,000 from Delta Properties (Name Account Number & sort code to be completed [then added in manuscript and initialled] RS + BS Chaggar T/A Delta Properties Acc No 49363203 sort code 05-0381
Please also accept this letter as authority to withdraw the internet banking facility for Delta with immediate effect.
We confirm that the dispute between us is settled and, subject to detailed legal documentation being entered in to between us, Balbir Singh Chaggar will not seek to freeze the above accounts at any time in the future.
Please confirm receipt of this letter and that it has been actioned as requested by return.”
2. Hitech and/or RSC will pay to BSC a total aggregate consideration of £1.6m split £800,000 for BSC and Hardev Kaur Chaggar's (HKC) shares in Hitech and £800,000 for BSC's interest in the properties held in Delta, payable as follows:
a. £300,000 on or before 31/12/12
b. £425,000 on or before 31/12/13
c. £425,000 on or before 31/12/14
d. £450,000 on or before 30/04/15
In case of any default in such payments BSC and HKC may give to Hitech and RSC parties 3 months notice in writing to pay the amount due at the time and failure by the other parties to do so will render the balance remaining from the aggregate consideration due and payable immediately, and in addition to any other remedies available to BSC but giving due credit for any payments already made under this agreement, if requested by BSC RSC agrees to jointly instruct alongside BSC an agent to sell at the then prevailing market value such of the properties held in Delta in order to satisfy the outstanding consideration, then due. Interest 5% over base rate in case of default only but not otherwise, with the deferred aggregate consideration being interest free.
3. BSC and HKC's shares in Hitech will transferred to Hitech by them signing the share transfer forms to be held in escrow by Clarke Wilmott LLP which shall be released pro rata as follows:
a. 10 shares in Hitech on payment of the sum at 2a
b. 10 shares in Hitech on payment of the sum at 2b
c. 10 shares in Hitech on payment of the sum at 2d
4. The parties are to seek their own tax advice and have confirmed that they are not relying on any legal or financial due diligence considering this unnecessary but the parties are willing to cooperate in relation to implement any reasonable tax planning that is not to their detriment, if such advice recommends that the properties held in Delta should be transferred to an SPV or any other reasonable tax mitigation solutions, in which case then the release of any shares owned by BSC in such SPV will be on the same basis as in clause 3 above.
5. For the avoidance of any doubt BSC and HKC will transfer any shares in Hitech or the SPV if formed to Hitech subject to the parties obtaining HMRC approval and BSC will transfer the properties owned by Delta to RSC or any nominee of his upon full payment of the aggregate consideration of £1.6m.
6. Pending the payment of £1.6m Hitech and Delta will pay a monthly sum of £4000 to BSC towards the sum of £1.6m from 1 month of the date more detailed settlement agreement referred to at clause 16 below (SA), which will be...
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