Blacklion Law LLP v Amira Nature Foods Ltd and Another

JurisdictionEngland & Wales
JudgeLady Justice Asplin,Lady Justice Falk,Lord Justice Moylan
Judgment Date15 June 2023
Neutral Citation[2023] EWCA Civ 663
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: CA-2022-001356
Between:
Blacklion Law LLP
Claimant/Respondent
and
Amira Nature Foods Ltd and Another
Defendants/Appellants

[2023] EWCA Civ 663

Before:

Lord Justice Moylan

Lady Justice Asplin

and

Lady Justice Falk

Case No: CA-2022-001356

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

His Honour Judge Paul Matthews (sitting as a Judge of the High Court)

[2022] EWHC 1500 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

John Russell KC (instructed by Bower Cotton Hamilton LLP) for the Appellants

Sebastian Kokelaar (instructed by Richard Slade & Co Ltd) for the Respondent

Hearing date: 10 May 2023

Approved Judgment

This judgment was handed down remotely at 11.30am on 15 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Lady Justice Asplin
1

This appeal is concerned with the proper construction of a solicitors' retainer, various aspects of the conduct of the trial and whether points which were not taken at the trial can be raised for the first time on appeal.

2

The Respondent, Blacklion Law LLP (“Blacklion”) is an English law firm which was instructed by the First Appellant, Amira Nature Foods Limited, a company incorporated in the British Virgin Islands (“Amira”) under a general retainer and what became known as the “Avatar Retainer”. We are concerned only with the Avatar Retainer. The Second Appellant, Mr Karan Chanana, is the chairman of Amira, a director and its majority shareholder. It is accepted that he is Amira's controlling mind.

3

The appeal is against the orders of HHJ Paul Matthews, sitting as a judge in the High Court, dated 24 May 2022 and 21 June 2022. The judge held that Blacklion was entitled to a fixed fee of £300,000 under the Avatar Retainer for work done by 31 May 2017, payable by Amira as a debt, plus contractual interest at the rate of 1.5% per month from 30 days after the date of the invoices rendered in relation to the fixed fee. He also held that Mr Chanana was liable to pay damages in the sum of £300,000 for procuring Amira's breach of the Avatar Retainer, causing Blacklion loss in that sum. He also decided that no credit need be given for certain shares which were in the name of Blacklion's principal, Ms Yasdani, because they could not be sold and the proceeds realised without the authorisation of Amira. The citation for his judgment is [2022] EWHC 1500 (Ch).

Background

4

This is intended as a summary of the relevant background to this appeal. A much fuller account is set out in the judgment to which reference should be made.

5

In January 2017, Mr Chanana proposed that Blacklion should undertake work in relation to the issue of high-yield bonds in Amira in order to raise further capital for the company. This was known as Project Avatar. Ms Yazdani agreed to take on the work and on 22 February 2017, Mr Chanana agreed with Ms Yazdani that shares in Amira would be issued and held on account of Blacklion's fees in relation to the project. On 25 April 2017, Mr Chanana signed a letter on behalf of Amira instructing Continental Stock Transfer and Trust Company (the “Agent”) as transfer agent and registrar of Amira's ordinary common shares, to issue 73,391 restricted shares to the value of US $384,570 to be held in the name of Ms Yazdani (the “Shares”). As the judge explained at [44] of his judgment, at that date US$384,570 was the equivalent of £300,000. On the same date Ms Yazdani signed a letter addressed to the Agent, acknowledging (amongst other things) that the Shares were being issued to her pursuant to a written agreement for services and that the proceeds of sale of the Shares were intended “solely as compensation for services rendered”. The judge found as a fact that by the end of April 2017, more than 90% of the work which Blacklion would carry out on the transaction had already been done [45].

6

The final form of the retainer agreement which became known as the Avatar Retainer was countersigned by Mr Chanana on 3 May 2017. Its terms, where relevant, are as follows:

Retainer

We have agreed that the Firm will charge the Company a fixed fee of £300,000 (“Fixed Fee”) for the Services plus disbursements (“Disbursements”) in connection with this Matter, subject to the completion of the Matter by 31 May 2017. And, it is agreed that the Company shall give irrevocable instructions to its transfer agent to issue an equivalent of its ordinary shares to the Firm and/or its designee to satisfy the Fixed Fee upon execution hereof. If the Fixed Fee is paid in the Company's Ordinary Shares (as set forth below) then such Shares shall be issued by the Transfer Agent as book entry restricted shares on or before May 4, 2017.

The Fixed Fee

The Company shall have the option of paying the Fixed Fee in either cash or its ordinary shares. If paid in shares, the Company shall cause its transfer agent to issue £300,000 equivalent of its ordinary shares (the “Shares”) to the Firm upon execution hereof.

The Fixed Fee represents payment for Services previously rendered and the services to be rendered in connection with the Matter.

The Firm will be able to sell the Shares freely in the open market at any time after six months from the date that services are rendered. Upon the sale of the Shares by the Firm, if the share proceeds (“Proceeds”) are less than the Fixed Fee, the Company shall pay to the Firm, the difference between the Fixed Fee and the Share Proceeds, at its option either in cash or additional ordinary shares immediately upon notification of the same. The Firm shall sell only such Shares until the Proceeds equal the amount of the Fixed Fee. Any Shares held by the Firm that remain unsold at the time that the Proceeds equal the Fixed Fee shall immediately be returned to the Company …

The Firm agrees that it shall not sell, on any one day, more than 10% of the average of the Company's daily share volume for the 65-days prior to such sale date.”

7

Amira argued that the Avatar Retainer should be construed to mean that payment of the fixed fee of £300,000 was conditional on the completion of Project Avatar by 31 May 2017. Although it appears that a considerable amount of work was undertaken, Project Avatar, in the sense of the bond issue, never took place. Accordingly, it was said that the Fixed Fee was not due. Amira also argued that it had complied with its obligation to pay the Fixed Fee because of the issue of the Shares despite the fact that it had not been possible to sell them because they remained subject to restrictions imposed under the relevant US regulatory regime.

8

First, at [5] the judge records that there were two applications before him at the commencement of the trial. The second application is of some relevance to this appeal. It was for permission for Mr Chanana to give his evidence by video link at 3pm on the last afternoon of the trial. The judge refused that application for the reasons he set out in a separate judgment, the citation for which is [2022] EWHC 2370 (Ch) which he summarised at [6] of the judgment. At [13] of that separate judgment he also concluded that it was appropriate to exclude Mr Chanana's evidence (in the form of four witness statements) entirely. In doing so, he noted in the separate judgment as follows:

“11. I bear in mind, of course, that the evidence of the second defendant is of some importance in considering the questions of whether there was a common mistake and also whether the second defendant procured a breach of contract by the first defendant with the claimant. But I also bear in mind that the primary argument here is one of construction which does not require a great deal of input from the parties; it simply requires the court to construe the particular document in the factual matrix in which it finds itself.

12. This, being a commercial case, has a whole wealth of documentation within which to find and locate the crucial document. All of the documents in the bundle are, in this case, admissible evidence of their content by virtue of paragraph 27.1 of the Practice Direction to Part 32 of the Civil Procedure Rules. Accordingly, there is a great deal of evidence on which the construction argument can be based and, indeed, which can go some way towards resolving the questions arising out of common mistake and procuring a breach of contract. In addition, of course, there has been the opportunity for the defendants' counsel to cross-examine several witnesses on behalf of the claimant and may make such use of the answers obtained, as may be appropriate. Then, further, there has been the evidence of Ms Nasralla who was, in effect, a kind of assistant to the second defendant in the sense that she dealt with a lot of things on his behalf and on his instructions. Therefore, her evidence is of some value also.”

9

Having considered a number of further issues in relation to witness evidence, some of which I shall refer to below, the judge turned to the proper construction of the Avatar Retainer. He held that the language used in the charging section was not clear and unambiguous and looked to see if there was a construction which was consistent with business common sense. He concluded that the construction advocated by Blacklion was consistent with business common sense. That was that the conditional language in the phrase “subject to the completion of the Matter by 31 May 2017” did not render the payment of the Fixed Fee conditional upon the completion of the project by that date. Instead, it related simply to the period of the work covered by the Fixed Fee so that work done after that date would be charged for in addition [54], [55], [57] – [61]. There is no appeal from this decision.

10

The judge went on to consider the question of contractual interest at [62] – [65]. In summary, he held that Blacklion's Terms of Business...

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    • United Kingdom
    • King's Bench Division
    • 27 September 2023
    ...Civ 24; [2017] RTR 22 at [29]).” 55 The most recent case on this point is Hudson v Hathaway [2022] EWCA Civ 1648, cited in Blacklion Law LLP v Amira Nature Foods Ltd [2023] EWCA Civ 663. In the former case at [34]–[35] Lewison LJ considered the authorities including Singh v Dass, as follo......

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