Brook Properties (Birmingham) Ltd v Alton & Company (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 14 December 2015 |
| Neutral Citation | [2015] EWHC 3622 (Ch) |
| Date | 14 December 2015 |
| Court | Chancery Division |
| Docket Number | Case No: B30BM001 |
[2015] EWHC 3622 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
Priory Courts, 33 Bull Street
Birmingham, B4 6DS
Mr Justice Newey
Case No: B30BM001
Mr Ross Fentem (instructed by Rubric Lois King Solicitors) for the Claimant
Mr Alex Hall Taylor (instructed by DWF LLP) for the Defendants
Hearing dates: 10–13 November 2015
The defendants, Alton & Co, a firm of solicitors, acted for the claimant, Brook Properties (Birmingham) Limited ("Brook"), in connection with a loan that it made in December 2007. Brook alleges negligence on the part of Alton & Co. Alton & Co deny negligence as well as advancing other defences.
Narrative
In mid-2007, a Mr Mohammed Hussain was asked by a nephew, Mr Nisar Afzal, whether he knew of anyone who would be able to lend him (Mr Afzal) some £700,000 in order to prevent his property at 9 Farquhar Road, Edgbaston from being repossessed. Knowing that one of his great-nieces, Mrs Saima Parveen, had recently inherited some valuable land in Pakistan from her grandfather, Mr Hussain contacted her and subsequently met her and her husband, Mr Muhammad Irfan. Mrs Parveen and Mr Irfan said that they would be willing to make a £700,000 loan to Mr Afzal (a brother of Mrs Parveen's mother) on the basis of an arrangement fee of £100,000, 10% interest and security over 9 Farquhar Road. After speaking to Mr Afzal, Mr Hussain confirmed to Mrs Parveen that the proposed terms were acceptable.
At this stage, Mrs Parveen sought to sell her land in Pakistan and a buyer was quickly found. On 5 December 2007, the sale was completed at a price of 120 million rupees (about £945,000). Mrs Parveen had flown to Pakistan a few days earlier, on 1 or 2 December. While in Pakistan, Mrs Parveen met Mr Afzal at least once or twice and was told by him that 9 Farquhar Road was due to be repossessed on 12 December.
By early December 2007, Mrs Parveen and Mr Irfan had arranged to acquire Brook for the purpose of the proposed loan to Mr Afzal. Mrs Parveen became the company's only director and Mr Irfan its secretary. By 6 December, steps had also been taken to change Brook's registered office from Corner Chambers, 590a Kingsbury Road, Erdington (which Mrs Parveen has described as "a 'default address' used as the registered company address of various 'shelf companies'") to 176 Norman Road, Smethwick, where Mrs Parveen and Mr Irfan lived.
Mr Afzal suggested that Levys, the Manchester solicitors who were representing him, should also be instructed by Brook. Levys, however, said that they were unable to act for conflict of interest reasons and proposed that Mr Martin Wilcock of Alton & Co, the defendants, should instead be approached.
Alton & Co had been established by Mr Wilcock and another solicitor, Mr Eddie Halsall, earlier in 2007. The firm had offices in Accrington and Longridge, near Preston.
In the early afternoon of 5 December 2007, Mr Wilcock spoke on the telephone to a person whom he understood to be Mr Irfan and a meeting was arranged for the next day. In an attendance note prepared during the morning of 6 December, Mr Wilcock recorded that he had spoken by telephone with both "The client (Mr. Irfan)" and "Michael Levy (the introducer)" and continued:
"Meeting arranged whereby client will attend with ID and sign Money Laundering Declaration for tomorrow morning."
Mr Irfan said this in his witness statement about a telephone conversation with Mr Wilcock on 5 December 2007:
"I … contacted the Defendant's offices by telephone … and spoke to Martin Wilcock …. I explained the loan transaction to him and that Brook Properties wished to instruct him to act on its behalf."
There is, however, reason to doubt whether it was Mr Irfan who spoke to Mr Wilcock. Mr Irfan's English is clearly poor and it will, if anything, have been less good in 2007. He ultimately preferred to give his oral evidence through an interpreter and I was left with the impression that he would have struggled to comprehend and respond to questions in English. I imagine that Mr Irfan was correct when he said in cross-examination that he understands English rather better than he can speak it, but even his estimate of his speaking ability was no more than about 30% to 40% and he recognised that his ability to read English is weak.
Given the limitations on Mr Irfan's English, I do not think he could have discussed anything at all complicated with Mr Wilcock on the telephone. Still less could there have been such a conversation without Mr Wilcock realising that Mr Irfan's command of English was very limited. During cross-examination, Mr Irfan suggested that Mr Wilcock had told him on the telephone that he should bring an interpreter to their meeting because he could not understand him (Mr Irfan). Mr Wilcock, however, denied proposing an interpreter and said that the individual to whom he spoke was fluent in English. Further, there was no reference to Mr Wilcock having spoken of an interpreter in Mr Irfan's witness statement: the point emerged for the first time in the course of cross-examination. In all the circumstances, I accept that Mr Wilcock took the person on the other end of the telephone line to be competent in English and made no mention of an interpreter attending the meeting. If, therefore, it was Mr Irfan himself who rang Mr Wilcock, the conversation must have been brief and simple. It is also possible that the call was made by someone else on Mr Irfan's behalf.
Mr Wilcock had some knowledge of the proposed transaction even before his telephone conversation with "Mr Irfan" (i.e. the true Mr Irfan or someone speaking for him). Mr Wilcock noted in one of his witness statements that he had already spoken to Mr Levy (of Levys). He said, too, that he was told by Mr Levy that he (Mr Levy) "was acting for Mr Afzal on a Proceeds of Crime Act application which involved 9 Farquhar Road … which was going to form part of the security for the proposed transaction".
Later in the afternoon of 5 December 2007, Mr Wilcock had faxed to him a letter outlining the transaction on which it was proposed that Alton & Co should act for Brook. The letter began:
"Further to our telephone conversation today, the information and instructions you require are as follows, we are arranging finance for Mr. Nisar Afzal, clients of Levy Solicitors as you are aware. This is to redeem the mortgage that Mr. Afzal has with Bank of Scotland. You are also aware that Eversheds are acting for B.O.S. We need you to firstly get the redemption figure of Eversheds. Also get all necessary documents in place for completion ASAP."
The letter went on to say that Brook was to have a charge over the property, there were to be arrangement fees totalling £100,000 and interest was to be charged at the rate of 10%. The letter was faxed to Alton & Co from Brothers Internet Café in Dudley Road, Birmingham.
The letter was signed by Mr Irfan, but drafted for him by a Mr Mohammed Khan. Born and educated to "A" level standard in England, Mr Khan speaks excellent English as well as Punjabi. He had ambitions to become a solicitor, but was obliged by circumstances to go into the family business. He has been the owner of a grocery store in Kings Heath since about 2011.
An attendance note gives more details of a conversation which Mr Wilcock had with Levys on 5 December 2007. The note states that Mr Wilcock rang Levys after receiving faxed instructions to act for Brook. The note proceeds to explain:
"Accordingly I spoke with Asim at Levy's offices to ascertain some more detail as to the transaction;
1. He tells me that Brook Properties Birmingham Ltd is a company formed for the specific purpose of providing the advance referred to in the attached fax.
2. He further tells me that he has told Mr. Irfan, (the Lender) that he will need to attend these offices with the requisite ID documents and enter into a Money Laundering declaration."
Mr Wilcock received, too, a letter from Mrs Parveen in which she referred to advancing money "to secure a first charge" on 9 Farquhar Road subject to a satisfactory valuation report, a £100,000 arrangement fee, a five-year term and annual interest of 10%. On the face of it, the letter was faxed from Pakistan at "09:38" on 5 December 2007. I suspect, however, that the fax was in fact sent rather later than this. On the basis of both British and Pakistani time, Mr Wilcock had yet to speak to "Mr Irfan" at 9.38 am on 5 December. Further documents that were faxed to Mr Wilcock from Pakistan in December 2007 also bear transmission times that are hard to reconcile with other evidence.
At 9.53 am on 6 December 2007, Mr Wilcock emailed Eversheds to ask for a redemption figure for the Bank of Scotland charge over 9 Farquhar Road. By 9.58 am, Eversheds had replied saying that they could not release the information sought without authority from Mr Afzal. Soon afterwards, Mr Wilcock received emails from Companies House telling him that details had been submitted to it of, among other things, Mrs Parveen's appointment as a director of Brook, Mr Irfan's appointment as secretary of the company and a change in the registered office.
The meeting arranged the previous day appears to have taken place at Alton & Co's offices in Longridge later in the morning of 6 December 2007. Mr Irfan attended the meeting with Mr Khan, who had driven him from Birmingham. In the course of the meeting, Mr Irfan signed several documents. One confirmed acceptance of...
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