Blue Station Ltd v Shahrokh Kamyab
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tuckey,Lord Justice Chadwick,Lord Justice Maurice Kay |
| Judgment Date | 05 October 2007 |
| Neutral Citation | [2007] EWCA Civ 1073 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 October 2007 |
| Docket Number | Case No: (1) A3/2007/0348 |
[2007] EWCA Civ 1073
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
(MR DAVID DONALDSON QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Tuckey
Lord Justice Maurice Kay
Lord Justice Chadwick
Case No: (1) A3/2007/0348
(2)A3/2007/0348(B)
Mr B Douglas-Jones (instructed by Messrs Benyon Nicholls) appeared on behalf of the Appellant.
Mr T Braithwaite (instructed by Messrs Rudge & Co) appeared on behalf of the Respondent.
After a four-day trial in the Chancery Division Mr David Donaldson QC, sitting as a deputy High Court judge, gave judgment for the claimant, Blue Station Limited, for £103,000 against the defendant, Mr Kamyab. The defendant appeals against this decision with the permission of Sir Martin Nourse. He effectively challenges the central finding of fact upon which the judgment turns.
Blue Station was one of two companies through which the defendant and two fellow Iranians, Mr Darvish and Mr Mesforoush, carried out property developments in London from late 2002 until November 2004. Mr Darvish held 40 percent and the other two men 30 percent each of the shares in Blue Station. All three were directors of the company which embarked upon a project to convert a property in Ealing into a number of flats.
On 12 July 2004 £103,000 was paid by Blue Station to the defendant by cheque signed by all three directors. It was the defendant's case that he was entitled to this money to reimburse him for sums totalling £100,000 which he had paid on behalf of the company for work carried out by the builder on the Ealing project between 21 March and 4 July 2003 and for certain other minor expenses which he had paid on its behalf.
At trial Blue Station did not dispute that the defendant had made such payments to the builder but claimed restitution of the amount of the cheque on the basis that these payments had not and could not have been made to discharge any indebtedness of Blue Station to the builder. It was common ground at trial that if Blue Station established this, it was entitled to recover the amount of the cheque. The judge found that it had done so for reasons which I will explain.
This was the judge's central finding of fact, but there were a number of other issues. It was the defendant's case that he had made the payments pursuant to an agreement made with his fellow directors at a meeting on or about 14 April 2003 at which he had been authorised to pay the builder whatever was due for which he would be reimbursed by the company. Mr Darvish denied that there had been any such agreement. The judge said that it was strictly unnecessary to decide this issue, but concluded that it was improbable that any such agreement had been made, observing that the evidence about itfrom both Mr Darvish and the defendant, had been far from impressive.
There was also an issue about how and when the defendant came into possession of the cheque. The defendant's case, supported by the other director, was that he filled out the cheque and all three men signed it at a meeting in a café. Mr Darvish denied that there had been any such meeting. He said the cheque was one of a number which he had signed in blank and left in the office to enable the company's day-to-day business to be carried on. The judge said that how and when the cheque came to be signed was irrelevant to the determination of the case; but even if Mr Darvish had signed it, as the defendant contended, it would have been on the defendant's representation that he was entitled to the money, which would have been incorrect.
As I have said, the central issue was whether the defendant did pay £100,000 for work on the Ealing project. The contract to carry out this work was made between Blue Station and Simpson Contractors (London) Limited on 8 October 2002. The contract price was shown as £519,000 plus VAT, but the agreed price was in fact £400,000 less 10 percent for prompt payment plus VAT. A bank had agreed to finance the project on the basis that Blue Station was to pay the first 30 percent of its costs. The inflated price in the contract meant that the bank was deceived into agreeing to finance the whole of the true contract price.
Work started at the beginning of March 2003. Its progress was to be measured and valued periodically by quantity surveyors on behalf of Blue Station and the bank to determine what the builder should be paid and the bank should advance. Blue Station's records show what sums it paid to the builder and the contributions made to those sums by its three shareholders. A comparison between the amounts due to the builder shown in the valuations with the amounts paid by Blue Station itself led the judge to conclude that there was “no room” for the £100,000 paid by the defendant to have been paid in discharge of Blue Station's obligations to the builder.
To substantiate this conclusion the judge attached to his judgment a table prepared by counsel, which considered the financial position on this project at various dates. It is not necessary to descend into detail but I can illustrate what it shows by reference to the position in the days following 4 July 2003, by which time the defendant's own payments had just reached the total of £100,000. And yet on 4 July the quantity surveyor's valuation of the total amount owing for the work, including VAT, was about £80,000, of which Blue Station had itself paid £75,000. Therefore, if the defendant was right, the builder had been paid £175,000—that is to say nearly £100,000 more than he was due—by or on behalf of Blue Station. Nevertheless the records show that the builder asked for more money at this time and on 7 July Blue Station paid a further £50,000 which had been raised from the shareholders, including the defendant. The table shows similar massive disparities between the amounts owing for the work and the amounts paid on the defendant's case for dates both before and after July 2003, whereas if the defendant's payments are excluded, those amounts are broadly the same. The judge also derived support or his conclusion from the fact that Blue Station's contemporaneous internal documents, and the invoices and claims emanating from the builder made no mention of the payments made by the defendant.
Mr Simpson, the builder's principal, made a number of conflicting statements to the parties as to whether he had or had not received money from the defendant for the Ealing project. He gave evidence at trial that he had, but neither he nor the defendant were able to give any satisfactory explanation as to why such large over-payments had been made, if indeed they had. At the end of his judgment, the judge said, from paragraph 32:
“It was suggested by BSL [Blue Station] (and denied by Mr Kamyab and Mr Simpson) that the monies may have been paid to SCL...
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