Dave Persad v Anirudh Singh (Trinidad and Tobago)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Neuberger |
| Judgment Date | 30 October 2017 |
| Neutral Citation | [2017] UKPC 32 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0021 of 2016,Appeal No 0021 of 2016 |
| Date | 30 October 2017 |
[2017] UKPC 32
Lord Neuberger
Lord Kerr
Lord Reed
Lord Hughes
Lord Hodge
Privy Council Appeal No 0021 of 2016
From the Court of Appeal of Trinidad and Tobago
Michaelmas Term
Civil Appeal - Lease agreement — Whether the judge erred in concluding that the appellant was liable to the respondent for sums due under the lease — Parties to the lease — Whether the appellant and Chicken Hawaii (Trinidad) Ltd were one and the same — Whether the facts of the case justifies piercing the veil of incorporation — Late incorporation of Chicken Hawaii
VTB Capital Plc v. Nutritek International Corp [2013] 2 AC 337.
Section 20 of the Companies Act
Appellant
Hari N Ramkarran SC (Instructed by Sheridans)
Respondent
Anand Beharrylal Kwaku Awuku-Asabre (Instructed by Yaseen Ahmed)
Heard on 21 June 2017
The primary issue on this appeal is whether, as the Court of Appeal held, Pemberton J was entitled to conclude that the appellant, Dave Persad, was liable to the claimant, Anirudh Singh, for sums due under a lease which Mr Singh had granted to a company called Chicken Hawaii (Trinidad) Ltd (“CHTL”).
The background facts are as follows. Mr Singh is the owner of premises consisting of two buildings at 1/4 MM Manzanilla Road, Mayaro, Trinidad. In late autumn 2001, when he was about to leave for the United States, he told his brother that he was looking for a tenant for the premises. In early 2002, having been told of the premises by Mr Singh's brother, Mr Persad contacted Mr Singh by telephone to discuss the possibility of taking a lease of the premises. Discussions then took place between the two men and they reached an agreement whereby Mr Persad would take a five-year lease of the premises starting on 1 April 2002, and that Mr Persad, who is a qualified attorney, would draft the lease.
Sometime in March 2002, Mr Singh allowed Mr Persad to occupy the premises in advance of the anticipated grant of the lease. Mr Persad then proceeded to carry out some works of decoration and improvement.
Meanwhile, Mr Persad had prepared a form of lease of the premises, which it appears he negotiated with Mr Singh's brother. The draft lease reserved a rent of TT$4,000 per month for the first two years and TT$5,000 per month for the last three years, payable monthly in advance. It also contained covenants by the tenant, including a covenant to pay the rent, to keep the premises in repair, to deliver up the premises at the end of the term, and not to commit nuisance. In addition, the draft lease contained a proviso for forfeiture in the event of the lessee failing to pay the rent or breaching any covenant.
In its opening passage, the draft lease stated that the lessor was Mr Singh, and, importantly for present purpose, that the lessee was CHTL, not Mr Persad. In about January 2002, a copy of the draft lease executed on behalf of the lessee was sent to Mr Singh in the USA for execution. In the normal way, at the end of the lease it was recorded as executed on behalf of the lessor and the lessee. The lessor was to be Mr Singh with a space left for him to sign. The lessee was recorded as CHTL, and it was stated that the seal of CHTL had been “affixed by Sandra Dass, Company Secretary”. In the space left for execution by the lessee was Ms Dass's signature under which CHTL's company seal had been affixed. Mr Singh took some time to sign the lease himself, but he did so on 1 May 2002, which is the date on which the lease is recorded as having been executed.
There appears to have been no mention of CHTL during the negotiations, which had proceeded on the assumption that Mr Persad would be the lessee. It would seem that the first time that Mr Singh heard that CHTL was to be the lessee, indeed the first time he had heard of CHTL was when he received the draft lease executed on behalf of CHTL. However, although he took some time to sign the lease and to send it back, Mr Singh did not challenge or even question the inclusion of the company as the lessee. In his evidence, Mr Singh said that he noticed that CHTL had been identified as the lessee and that he appreciated that its status as a limited company meant that it was a separate legal entity from Mr Persad — unsurprisingly as Mr Singh is a qualified MBA.
Following the grant of the lease, a restaurant was run from the majority of the premises, but a part was used by Mr Persad personally as an office, and another part may have been used for residential purposes. The rent was initially paid, albeit not always on time. The evidence established that, on at least two occasions, namely in July and August 2004, the rent was paid by cheques signed by Mr Persad drawn on CHTL's bank account. Meanwhile, after having received complaints of nuisance, Mr Singh visited the premises in early September 2003 when he observed some disrepair. In April 2004, a notice identifying the items of disrepair and requiring their remedy was served on CHTL by Mr Singh's attorney. (Such a notice is required by section 70(1) of the Conveyancing and Law of Property Act (Chapter 56, No 1) as a preliminary step before a forfeiture can be initiated.)
On 28 September 2004, Mr Singh issued proceedings for possession, arrears of rent amounting to TT$16,000, damages for breach of covenant, and mesne profits. Both CHTL and Mr Persad were named as defendants. The statement of claim identified the lease as having been made between Mr Singh and CHTL, and referred to Mr Persad as a director of CHTL and “at all material times acting on his own or as the servant and/or agent of [CHTL]”. It referred to “the defendants” as having been in breach of the repairing and nuisance covenants, and stated that CHTL was in arrear with the rent. The prayer for relief sought against both defendants possession, arrears of rent, mesne profits, and damages for breach of covenant, The statement of claim was later amended to record the fact that the premises were vacated during August 2005.
CHTL and Mr Persad served a defence and counterclaim. In the defence, the grant of the lease to CHTL and the covenants pleaded in the claim were admitted. It was also admitted that Mr Persad is and was “a director and agent” of CHTL, but it was denied that he “at all material times acted on his own”. The breaches of covenant alleged by Mr Singh were denied. In its counterclaim, CHTL sought damages from Mr Singh for allegedly disrupting its restaurant business carried on at the premises, repayment of a loan, and reimbursement for the cost of some improvements to the premises.
The claim and counterclaim came on for trial before Pemberton J, and after hearing witnesses (including Mr Singh and Mr Persad) and legal argument, she gave judgment on 15 July 2011. The effect of her decision was that judgment was given against both CHTL and Mr Persad for TT$21,569.69 damages for breach of covenant, for TT$17,833.33 in respect of arrears of rent, and for mesne profits at TT$5,000 per month for the period between 11 August 2004 and 18 August 2005, together with interest in each case at the rate of 10% per annum from 18 August 2005 to the date of judgment; and the defendants were ordered to pay TT$11,673 costs. On the counterclaim, she gave CHTL judgment for compensation for improvements, but dismissed the other claims.
Mr Persad appealed to the Court of Appeal (Smith, Moosai and Mohammed JJA) against the finding that he was liable to Mr Singh for any of the sums awarded against him, but his appeal was dismissed in a short ex tempore judgment given on 21 May 2014.
Mr Persad now appeals to the Board against the finding that he was liable to Mr Singh for any of the sums awarded against him and upheld by the Court of Appeal. There is no challenge as to the Judge's conclusions in relation to the liability of CHTL (or the amounts awarded against that company) or any of her findings of primary fact.
In these circumstances, the only part of the Judge's full and careful judgment to which reference needs to be made is in paras 63 to 66 where she considered the issue which she described as “Who were the ‘real’ parties to the lease and from whom can [Mr Singh] recover?” She concluded that Mr Persad and CHTL “were one and the same and his personal liability for any defaults of [CHTL] is founded” and so Mr Singh “can recover from both defendants”.
She justified this conclusion primarily on the basis that CHTL was only formed after the discussions as to the level of rent, that Mr Persad did not draw the identity of the lessee or even the existence of CHTL to Mr Singh's attention when or before sending him the draft lease for execution, and that Mr Persad took possession personally from the start. She held that this entitled her to pierce the corporate veil and hold that CHTL's liabilities under the lease were also the liabilities of Mr Persad. She further justified this conclusion on the ground that Mr Persad “use[d] the company as an avoidance mechanism so as to displace the question of whether it is just to pierce the veil”. She found that “there was a fluid exchange of persona between [Mr Persad] and [CHTL], which was not present at the negotiation and conclusion of the lease”, and that Mr Persad “concluded the negotiations in his personal capacity [and] then formed the company”. She also made the point that he “produced no corporate documents”, and that “it [was] evident that this was a one man show, in the hope that if all was not well he would not be held personally liable”.
In upholding this decision, the Court of Appeal explained that “[a] court may pierce the corporate veil when there is an abuse of the corporate personality to evade or frustrate the legal consequences of one's actions”. They summarised the reasons for the Judge's...
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