Bank of Leumi (UK) Plc v Philip Robert Akrill
| Jurisdiction | England & Wales |
| Judge | Judge Dight |
| Judgment Date | 26 November 2014 |
| Neutral Citation | [2014] EWHC 4341 (Ch) |
| Docket Number | No: HC14-CO1283 |
| Court | Chancery Division |
| Date | 26 November 2014 |
[2014] EWHC 4341 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London
WC2A 2LL
His Honour Judge Dight
(Sitting as a Judge of the High Court)
No: HC14-CO1283
Mr Casey (Instructed by Solicitors) appeared on behalf of the Claimant
Mr Pipe (Instructed by Solicitors) appeared on behalf of the Defendant
Approved Judgment
Wednesday, 26 November 2014
By an order of the Court of Appeal made on 17 July 2014, the defendant was granted conditional leave to defend these proceedings. By paragraph 3 of that order, the Court of Appeal provided that "in the absence of agreement between the parties as to the conditions, the matter should be remitted to a judge of the High Court of Justice Chancery Division for determination of the appropriate conditions to impose". The parties have failed to reach agreement and accordingly, after the exchange of a considerable volume of evidence in accordance with the directions given by the Court of Appeal, the matter comes before me to determine the appropriate conditions.
The claimant asks me to impose a condition that the whole of the claimed debt be brought into court, something in the order of £3.7 million. The defendant resists any condition which requires him to bring money into court, but says that if I reject that suggestion, any sum which I order should be modest in amount.
The claimant sues on two guarantees given by the defendant to secure the liabilities to the claimant of two companies, Manor Asset Limited ("Asset") and Manor Property Limited ("Property"). The defendant is the sole shareholder of those two companies. The lending which constitutes the principal liability in this case relates to the intended development of a site in Salford ("the development site"). The principal debt now exceeds £4 million. The guarantees are limited all monies guarantees, limited to the sum of £3.7 million so far as Asset is concerned, and £400,000 so far as Property is concerned.
Demands were made in respect of the principal lending and then under the guarantees in January 2013. By its particulars of claim issued on 2 April 2013, the claimant sought from the defendant alone, the companies not being parties to the proceedings, the sum of £3.77 million. The claimant then sought summary judgment on its claim. The defendant defended that application on the grounds that (1) he was induced to enter into the guarantees as a result of fraudulent misrepresentations to the effect that the claimant would exhaust its remedies against the principal debtors before looking to him; and (2) the bulk of the principal lending was not due for repayment because it had been converted from a loan repayable on demand to a loan repayable on reasonable notice and that no such reasonable notice had been given.
The claimant contended that the evidence put forward by the defendants in opposition to the application for summary judgment was not credible and that the arguments advanced by him disclosed no real prospect of successfully defending the claim.
The claimants persuaded the court at first instance to give it judgment for the entire sum. On appeal by the defendant, the Court of Appeal held that the two arguments advanced by him were, though improbable, not wholly implausible or fanciful.
Kitchin LJ gave the leading judgment in the Court of Appeal and, in his conclusion at paragraph 56, said as follows:
"For all the reasons I have given I have reached the conclusion that the judge fell into error in finding that Mr Akrill had no real prospect of establishing that, as a matter of fact, Mr Cooper made to him the particular representations upon which he claims he relied. I also believe the judge fell into error in concluding that Mr Akrill had no real prospect of establishing that, after 30 November 2011, the Bank extended a loan facility to Manor Asset on the basis that repayment could only be enforced on reasonable notice. Nevertheless, I am also satisfied that it is improbable that Mr Akrill's case on either issue will succeed. In these circumstances I believe that this is an appropriate case in which to give conditional leave to defend. It is well established that any condition must be one which is capable of being complied with. This is not a matter which was explored before the judge and, this being so, the parties were in agreement before this court that, were we to reach the conclusion that conditional leave to defend should be given, the matter should be remitted to the High Court."
In paragraph 57 his Lordship went on to say:
"Accordingly I would allow the appeal to the extent I have indicated and direct that the application be remitted to the High Court for consideration of the appropriate conditions to impose. The judge hearing the matter will no doubt consider, so far as he or she considers it appropriate, the sufficiency of the disclosure which Mr Akrill has made in his evidence in support of the stay application of the assets available to him and the various Manor Group companies."
There has been a considerable body of evidence in this case which I have been taken to, exploring, among other things, the matters referred to by the learned Lord Justice in that final paragraph of his judgment. I have borne that evidence in mind in reaching the conclusions which I will come to in due course.
Much of the evidence is contentious, in that there are repeated challenges to statements of facts contained in the other parties' evidence. On the application before me, it is not appropriate, and indeed in my judgment not open to me, to begin to determine these contested factual issues and I do not do so. I will not in this short judgment on the limited issues set out the detail of the evidence to which my attention has been drawn. I have also been referred to a number of authorities which I will come to in due course.
The parties' respective stances in the course of arguments are, in essence, as follows. The claimant submits, first, that the defendant's Defence is improbable and advances four reasons in support of that submission, each of them developed in the course of argument. Secondly, that the defendant in breach of his duty of full and frank disclosure on this application has failed to provide good and reliable evidence of his means entitling me therefore to draw the inference that he has assets which would be available to meet the condition which they suggest should be imposed. Thirdly, that the defendant's assertion that the claimant is in any event fully secured for the principal debt by a first charge which it holds over the development site is (a) overlooks the purpose of imposing a condition on permission being given to defend a claim, alternatively is of relatively limited importance in considering what conditions to impose; and (b) is incorrect as a matter of fact because of the deficiencies in the valuation report relied on by the defendant, which deficiencies were explained to me in detail in the course of argument.
The defendant submits that the claimant is fully secured, and secondly that, although the defendant has many assets, none of them can be realised at full value quickly or easily and that, if the defendant were forced to liquidate his assets, which he describes as "nest eggs", he would be substantially prejudiced and would suffer long-term harm and that any condition therefore should not require him to realise any of his assets. His evidence is that, while he holds assets with a value of £20 million (or thereabouts) he has no income and currently lives and funds his defence of this claim on what he has given by others or on smaller assets which he realised some time ago.
I am afraid that I expressed my incredulity in the course of submissions at Mr Pipe's suggestion that anyone with £20 million worth of assets on their own case could be described as being "on their uppers", even if they had no income or cash in the bank. I am afraid it is a view that I still hold after having re-read the evidence and considered all the submissions which have been made.
In determining this application it seems to me that it is important to consider before doing so what principles govern the imposition of conditions on the grant of permission to defend a claim and what their intended purpose is. One can derive the following principles from the cases and the rules to which my attention has been drawn.
First, having regard to paragraph 5.2 of the practice direction to CPR Part 24 the orders which a court may make on an application under Part 24 are now circumscribed and include (per paragraph 5.1): (1) judgment on the claim; (2) the striking out or...
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