Business Mortgage Finance 4 Plc v Rizwan Hussain

Hearing dates: 2–11 February 2022

APPROVED JUDGMENT

Introduction

This is my judgment after the trial of the claimants' committal application dated 28 June 2021. The claimants allege that the defendant, Mr Rizwan Hussain, has breached an injunction granted by me on 8 February 2021 and sealed on 12 February 2021 (“the Injunction”).

The proceedings leading to the Injunction concerned a number of securitisations of loans and mortgages (sharing the name Business Mortgage Finance or BMF). The claimants are the issuers of various series of notes traded on public exchanges (and are sometimes referred to below as “the Issuers”). As is commonplace in securitisations there are many parties having the functions set out in the transaction documents. These parties include the Issuers themselves, the directors of the Issuers, the trustees of the notes, the servicers of the underlying loan and mortgage portfolios, the cash/bond administrators and the banks who hold various accounts for the securitisation parties.

Mr Hussain was one of the principal defendants in the proceedings which culminated in the Injunction. The judgment ( [2021] EWHC 171 (Ch)) has this summary at [1]:

“I have heard the trial of two closely related Part 8 claims: FL-2020-000023 (“the Injunctions Claim”) and CR-2020-003605 (“the BMFH Claim”). In very broad terms the Claimants say that there has been a sustained and determined assault by the principal Defendants on a group of securitisation structures in which the Claimants are the issuers of publicly traded notes. They say that the Defendants have purported since early 2019 to assume various roles and offices in relation to those structures (as directors, trustees, receivers and otherwise) and have usurped the existing office holders. The Defendants have used those assumed positions to interfere with the business of the Claimants: they have purported to change the registered offices, sell the underlying securitised assets, sought to change bank account mandates, forfeit and sell the Issuers' shareholdings, make filings at Companies House, and make regulatory news service announcements to the capital markets. The Claimants say that the Defendants have done all this without any right or basis – they say indeed that the Defendants are strangers to the securitisation structures. They say that the Defendants have done this in the teeth of the Claimants' protests and repeated legal proceedings designed to halt the Defendants' conduct.”

I found in the judgment that the true directors of the Issuers were employees of a corporate services group called the Sanne Group and that the defendants had sought to remove and replace them unlawfully and without authority. I found that the defendants had taken other steps to interfere with the securitisations, including by purporting to replace the trustees, Bank of New York Mellon (BNY) and the servicers and cash/bond administrators, and to forfeit and sell the shares in the Issuers to a Marshall Islands company called Highbury Investments Limited (Highbury). I found that the defendants' conduct constituted an unlawful and unauthorised interference with the Issuers and their affairs.

I summarised my conclusions at [252] of the judgment:

“The Defendants have targeted these securitisation structures relentlessly. One or other of them have pretended to occupy the roles of directors of the Issuers, trustees for the noteholders, receivers of the underlying assets, Servicers, advisers to the Issuers, and other positions. They purported (in their assumed role of directors) to forfeit the shares held by BMFH in the Issuers and sell them to Highbury. They managed to change important company filings at Companies House and made misleading announcements to investors over the RNS. None of this is legitimate. The Defendants have never occupied any of these roles. They are, for legal purposes, strangers to the Securitisations. The reasons they have given for their actions are spurious. The corporate assault has been going on for the best part of two years, in the teeth of earlier orders of the courts and the Claimants' reasoned protests. It must now stop. I shall grant relief in respect of both claims. This includes orders for the rectification of the Companies House registers for the Issuers, declarations and final injunctions.”

The Injunction was a final order made after the trial. In broad terms it prohibited the defendants from interfering in the BMF securitisations, including by holding out anyone other than the true directors of the Issuers as directors; or by holding out other persons as having the roles of trustees, servicers, cash/bond administrators and other roles concerning the securitisation structures. I shall return below to the terms of the Injunction.

The committal application had annexed to it particulars of contempt arranged under seven heads (called “Breach One” to “Breach Seven”, but I shall substitute the neutral terms “Count One” to “Count Seven”). At the trial the claimants dropped Count Five and most of Count Six as they were repetitive of other grounds. They produced a marked-up version of the particulars of contempt showing the remaining Counts.

The claimants also made an application for relief retrospectively dispensing with the requirement under CPR 81.4(2)(c) for personal service of the Injunction on Mr Hussain. They also sought an order dispensing with the requirement that the penal notice appear on the front of the Injunction.

The committal application was supported by the first affidavit of David Pearlman; the first affidavit of Glen Watford; the first affidavit of Philip Smith; the first affidavit of Kirsten Kitt; the first affidavit of Caroline Hunter-Yeats; the second affidavit of Caroline Hunter-Yeats; the eighth witness statement of Caroline Hunter-Yeats; the second affidavit of Kirsten Kitt; and the second affidavit of Glen Watford.

In broad outline the claimants allege that Mr Hussain knew of the Injunction by 7 April 2021 at the latest; that between then and 18 June 2021 he took a series of steps which constituted breaches of the Injunction; and that he knew of the facts which made his conduct a breach of the Injunction. Mr Hussain has not taken any of the relevant steps in his own name. The claimants say that Mr Hussain has indeed deliberately taken the relevant steps in the names or other individuals and entities (or in collaboration with them) and has thereby breached the Injunction; or that he has caused or procured others to act in breach of the Injunction. They also say that there have been further steps after 28 June 2021 which, while not forming the subject matter of the charges of contempt, are further evidence that Mr Hussain has taken or caused or procured the steps taken by or in the names of others.

Relevant procedural history

The committal application was issued on 28 June 2021. I am satisfied that it was served by email on Mr Hussain on 9 July 2021. I have already ruled to this effect on 8 February 2022: see [2022] EWHC 353 (Ch). I shall also address it further below.

There was a directions hearing in the committal proceedings on 27 September 2021. Mr Hussain did not appear, but a company called Kipling Firs Limited (“Kipling”), acting by a Mr Artemiou, sought an adjournment of the committal proceedings. (I shall have much more to say about the connections between Mr Artemiou, Kipling and Mr Hussain below.) I refused Kipling's application and gave directions for the service of evidence and for the trial of the committal application. I was satisfied that the committal proceedings had been brought to Mr Hussain's attention by email on 9 July 2021 by service to his various email addresses and ordered that there had been valid service on that date and that further documents could be served by the same means.

Another company associated with Mr Artemiou is called BMF Assets No. 1 Limited (“BMF Assets”). An application was made in the name of that company for an injunction seeking to restrain the claimants from spending their funds on (inter alia) the legal fees of pursuing the committal proceedings against Mr Hussain. A hearing took place on 19 November 2021. Mr Artemiou appeared at the hearing on behalf of BMF Assets. He filed long and detailed written submissions. As I recorded in my judgment of 19 November 2021, Mr Artemiou had no understanding of the legal basis of the application. He declined to answer questions about it and indeed invoked the privilege against self-incrimination. The injunction he was seeking would have had the practical effect of ending the committal proceedings against Mr Hussain by stopping the payment of legal fees. I dismissed the application on the grounds that BMF Assets had not raised a serious issue to be tried and that there was in any case no proper basis for the relief sought. I held that the application was totally without merit. The judgment is at [2021] EWHC 3306 (Ch).

Mr Hussain has not engaged in the committal proceedings. He did not communicate with the claimants or the court about them until 17 December 2021, when he emailed the court claiming that he had only just heard about the Injunction and committal proceedings and that he was making arrangements to take part...