Bank of Credit and Commerce International Sa and Another v Nasir Hussain and Another
| Jurisdiction | England & Wales |
| Judgment Date | 15 December 1999 |
| Judgment citation (vLex) | [1999] EWHC J1215-31 |
| Docket Number | CH 1995-B-No 6454 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 15 December 1999 |
[1999] EWHC J1215-31
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Hon. Mr Justice Hart
CH 1995-B-No 6454
Andrew MITCHELL instructed by Messrs Wilde Sapte for the Claimants
The Second Defendant appeared in person
Hearing dates: 1st to the 4th November 1999
This is the official judgment of the court and I direct that no further note or transcript be made.
DATED: 15th December 1999
By this action, the claimant acting by its liquidators ("the Bank") seeks against the Defendants Nasir Hussain and Sanam Bhutto Hussain the following principal relief: (1) possession of a leasehold property known as Flat 6, 194 Queensgate, London SW7 ("Flat 6"). Flat 6 is registered in the names of the first and second defendants and was charged by them to the Bank pursuant to a legal charge ("the Flat 6 charge") dated 24th September 1987; and (2) a money judgment pursuant to the Flat 6 charge, alternatively pursuant to a guarantee dated 29th September 1986 ("the Guarantee"). At the date of both instruments the defendants were married and living together at Flat 6. They subsequently, in about 1989, separated and were finally divorced in early 1994.
The Flat 6 charge and the Guarantee were each given to secure the liabilities to the Bank of a company Commercial Consolidated Limited ("CCL") in which the defendants were interested as directors and shareholders, and which had been formed by the first defendant as a vehicle for the purchase, refurbishment and sale of residential properties. CCL was 99% owned by the first defendant, the second defendant owning one only of the 100 issued shares. It is the second defendant's contention that, although she understood herself to be the secretary of CCL, she was unaware that she was also a director until well after the marriage broke down (it was finally dissolved in 1994). However that may be it is, or has become, common ground that the second defendant played no active part in the management of CCL's business.
Representation of the parties.
Until shortly before the action came on for trial, the defendants had each had the benefit of separate legal representation throughout the course of the proceedings, which had been started by originating summons as long ago as 19th October 1995. However, on the first morning of the trial (1st November 1999) it became apparent that neither defendant had legal representation for the purposes of the trial itself. In the first defendant's case this was as a result of the suspension of his legal aid certificate. Mr Isaac Jacob of counsel appeared on his behalf to seek an adjournment. This application was put partly on the basis of the possibility that the Legal Aid Board might in the near future restore his legal aid, and partly on the basis that the first defendant's position needed to be reconsidered in the light of very recent changes in his personal circumstances. I was told that he was currently resident in Pakistan where he is under sentence of death, but that there was a possibility of this sentence being commuted if the necessary "blood price" could be raised (of which there was some prospect). I was also told that the recent coup in Pakistan created some additional prospect of ameliorating his position. Given the procedural history of the case, I refused the application for an adjournment.
The second defendant's position was altogether different. She had apparently dispensed with the services of her solicitors (Messrs Cawdery Kaye Fireman and Taylor) some fourteen days previously, and was in the process of reinstructing solicitors who had previously been instructed by her at an earlier stage in the proceedings (Lucas Baron Jacobs). I acceded to an application by the former to come off the record, and was informed by counsel acting for the latter that they were not yet in a position to come on the record, and would not in any event be in a position effectively to represent her without a significant adjournment of the proceedings. The second defendant was not in court at this point, and no application was made for any adjournment on her behalf.
Accordingly when Mr Mitchell opened the action on behalf of the Bank no one appeared for either of the defendants, and neither was personally present.
During the course of the morning it emerged that the second defendant was proposing to attend personally at 2 o'clock, and she duly did so accompanied by a Mr Rees. She gave me a short explanation of how she came to be unrepresented, the gist of which was that she had been unable to comply with a request for funds made by her solicitors in early October, and she explained to me that her absence that morning had been because no one had informed her of the date of the trial. She told me that she had never signed the Guarantee and, while she had signed the Flat 6 charge, she had had no legal advice in connection with that; that she had become estranged from the first defendant in about 1988 and had separated in 1989. Although expressing a willingness for the trial to proceed ("I am as ready as I am ever going to be") she appeared to be in a highly distressed state. In due course, after the Bank's first witness (Mr Turtle) had given his evidence it became apparent that her tearfulness was going to prevent her taking any effective part in the cross-examination. Following a short adjournment Mr Rees indicated to me that she wished him to act as her McKenzie friend, and in that capacity he sought an adjournment to the following day (which was not opposed and which I granted).
On the following morning Mr Rees renewed his application to act as her McKenzie friend and in that capacity to be permitted, in effect, the privilege of conducting the cross-examination of the Bank's witnesses and making submissions on her behalf. Although this extended role for the McKenzie friend was opposed by the Bank (and I was referred in that regard to Reg v Bow County Court ex p. Pelling [1989] 1 WLR 1807) I acceded to the request, largely on the grounds that the second defendant's emotional state continued to appear to me to be such as to render her for practical purposes incapable of efficiently conducting her own defence without some such assistance. Mr Rees in the event in no way abused the privilege thus exceptionally accorded to him.
Issues arising in the pleadings.
The first defendant, by his amended defence dated 18th April 1987, raised the following defences to the claim against him:
(1) he alleged that the Guarantee and Flat 6 charge had been entered into to support a facility agreement dated 10th July 1987, the purpose of which had been to afford CCL finance for the purchase of two properties, 12/18 Hill Street London ("Hill Street") and 53 Pont Street London ("Pont Street"); and that that purpose had come to an end when Hill Street and Pont Street had been sold and the facility repaid in full. It was alleged that the Flat 6 charge ought to have been cancelled when the two properties were sold (paragraphs 5 and 6 of the amended Defence);
(2) he alleged that the continuing indebtedness of CCL to the Bank had arisen as a result of the latter wrongly permitting the CCL accounts to be debited with the first defendant's own personal expenditure, and that the Bank was obliged to re-credit those accounts with those drawings (paragraphs 7 & 8 of the amended defence);
(3) that at the date of both the Guarantee and the Flat 6 charge, the Bank had been trading while insolvent and thereby perpetrating a fraud on all its customers; and that both the Guarantee and the Flat 6 charge were therefore unenforceable (paragraphs 13 to 15 of the amended defence);
(4) that, for a variety of reasons, the Bank had wrongly computed interest on the account/s and was not entitled to the interest claimed (paragraphs 16 to 19 of the amended defence);
(5) that Flat 6 had been purchased with money provided by the second defendant's mother and that he at all material times had held it on a bare trust for the second defendant. He also alleged that the Bank knew of this at the date of the Flat 6 charge (paragraphs 20 and 21 of the amended defence)
(6) that the Bank's subrogation claim (as to which see below) was unsustainable (paragraphs 23 to 28 of the amended defence).
The first of these defences was raised (in words identical to those used by the first defendant in his original defence) by the solicitor-drawn defence dated 12th March 1997 of the second defendant. However, it was amplified by a further allegation (which had not featured in the first defendant's defence) that the Bank had induced the execution of the Flat 6 charge by a misrepresentation made to the first defendant (and transmitted by him to the second defendant) that the Flat 6 charge was only required pending perfection of the Bank's security over Hill Street, or the earlier sale of that property (see paragraphs 7 to 10 of the second defendant's defence).
The second, third and fourth of the listed defences were taken again by the second defendant in identical words (see paragraphs 11 to 19 of her defence).
The fifth of the listed defences was also taken by the second defendant, although the wording was not here identical. The second defendant's case was that the purchase moneys for Flat 6 had been provided by her mother andherself. She did not allege that the Bank knew of the extent of her beneficial interest at the time of the Flat 6 charge.
The sixth of the listed defences was taken by the second defendant in almost (but not quite —compare paragraph 30 of her defence with paragraph 26 of the first defendant's) identical terms.
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